Dáil Éireann debate -
Wednesday, 24 Jul 1974

Vol. 274 No. 11

Committee on Finance. - Finance Bill, 1974: Committee Stage (Resumed).

Question again proposed: "That section 14 stand part of the Bill."

Mr. Blaney

Again I protest. This matter should not be proceeded with. This section under discussion is relevant to all other sections. By the repeal of this section, and this section only, is it possible to apply any form of taxation to any type of farming profits. In that context, the entire spectrum of the farming activities and their gloomy situation at the moment can properly be discussed, relevantly and within the rules of the House.

In my view the Minister has chosen a bad time to tax farmers. I was amazed, amused and then appalled by his insistence that the farmers should be grateful that last year was so bad. It was brought home to them that they could claim in future years against their profits. That was the clear interpretation given by the Minister this evening. Whether these people survive the present crisis or not is a matter which does not seem to have entered the heads of the Minister and the Cabinet. The whole thing is madness in the extreme.

In anticipation of our entry into the EEC, and taking our deductions and calculations based on the shortfall of production of those in the EEC, our farmers were encouraged to expand and enlarge their beef output, even at the expense of other farming activities. None of these promises which were made freely against the background of our impending entry to the EEC, was justified. Farmers have been in dire straits over the last nine months and will be in even worse straits over the next nine or 12 months.

The Minister sees merit in the repeal of the exemption which was enshrined in the 1969 Act so as profits were concerned. At this stage, we should ask ourselves what will be the effects and impacts of adding this new unknown burden to the backs of the farming community, who are already bent under the impact of the losses they have suffered and have no hope in the immediate future that their losses will be recouped. Even if all the Minister's proposals were proper, right and agreeable, surely this would be the time to say that we will not add further misery to the lot of the farming community who have been so badly misled—not deliberately but misled nevertheless— so badly left out. They have lost much and are still losing heavily at the present time. At this stage should we not be doing the reverse and trying in various ways to encourage those farmers to stick it out, to hold on and to part with nothing they can keep on their farms for the better times which must come? Should we not be doing that rather than driving a further nail into the coffins of the cattle producers of this country?

One might well say—and I am sure this will be said—but these are the bigger farmers. Bigger by what amount? bigger in what way?—in the capital investment that they are carrying at the moment with no return on it and net losses against their stock as they stood 12 months ago; farmers designated as big farmers by virtue of being £100 valuation or over; a valuation which goes back 120 odd years, that in many cases has no relevance today whatsoever to the value of land in the different parts of this country.

If we are to use the poor law valuation surely the first thing that should have been done—in deciding who should and should not come within the code—was to update the code. That has been sought and talked about for longer than has the lack of taxation or a tax code on the farmers. Less has been done about it and apparently less will be done about it. We are just going to allow it meander on in its own way; let it hammer away, accepting these figures of valuation as if there were something sacrosanct about them whereas we know, for a fact, that from county to county, barony to barony, indeed even from townland to townland, we have the most extraordinary variations in valuations of land in this country. This is capable of being explained if we go back to the time when that particular Valuation Act was brought into being, in that the activities in farming at that time were different and have changed immensely since then; lands producing crops which appeared to be of a particular value at that time were more heavily valued, naturally, than those nearby producing different types of crops. But the whole scene is and has changed in many cases. If the positions of valuations were reversed as between barony and barony, parish and parish or county and county we might be nearer an equitable land valuation system than obtains at present. But we are giving no consideration to that whatsoever.

Apart from my appeal to the Minister as to the common sense and wisdom of setting aside this proposal until the weather on the sails front has cleared, there is very good reason and argument that that which is based on the Valuation Act of 1850 or thereabouts cannot, should not and could not be justifiably used as a yardstick to decide what farmer comes within and what farmer stays outside the code of taxation now proposed.

In addition to that I would add that this may merely be the beginning, that while it is being slipped in rather quietly on the basis that it is a very small percentage of farmers only who will come above the £100 land valuation, have we any guarantee that that will not be reduced to £90 next year, £80 the year after or £70 or £50 or £40 or that the valuation limit will not be eliminated? I am quite sure the Minister has no intention, nor would it be in the minds of his advisers, that any such stipulation will be given to the passage of this piece of legislation. No: I believe that what is intended here is not only to do as those who talk about the racketeers of land, land speculators and companies burying their profits, showing them as activities under farming and getting away with the exemption in the 1969 or previous Acts. I believe that in order to catch those the Minister is starting something which may well, in its own time, sound the death knell of the moderate-sized farmer, not to mention the small farmer.

It is a rather strange contradiction that we have the Land Commission strenuously trying to step up the size of farms and giving every good reason why they should so do, refusing their consent to sub-divisions, to sales. Yet the effect of the Minister's proposal for taxation of farmers— were it to continue with the £100 limit and upwards—must have the effect of fragmentation and reduction by legitimate means of the area of holdings so as to bring people under the £100 valuation and keep them outside the code he now proposes. It is my belief that while the £100 is mentioned at the moment, it is merely the thin end of the wedge; it is the manner in which it may well have been slipped across the farming community; that their fight—if they were to fight on this issue—would be for the few large farmers in the country only and not for the general body of farmers. I am amazed that the farming community has taken this in the manner they have done. The only conclusion I can reach is that they have taken such a hammering in recent times there is no fight left in them. If they were as cocky as I have seen them before, the Minister would not be attempting to put through this legislation without very drastic amendments even at this stage.

I say to the Minister that he is wrong in applying a tax code at this stage. I say he is doubly wrong in relating that tax code to an outmoded, and totally false valuation system that should have been revised every year since 1850 but which has never been touched since then and about which nothing of any practical use is being done, or is likely to be done, judging by the lack of activity by the Government in the foreseeable future.

I believe he is wrong also in adding this particular burden of over £100 valuation on those in some counties, who are paying, on that valuation, as much as £9 in the £ rates. The Minister talked here a while ago about the amount of relief being provided—I think £27 million or £30 million, some figure like that—and talked about that relief as if it were something by way of a gift to the farming community. It may well be so regarded and written down in the book but it is not done for the love of the farming community. It is done because it is believed by this and previous Governments that it was necessary that such relief should be provided because of the ever-increasing and intolerable burden local taxation has become in relation to the poor law valuation under which our land has been valued well over 100 years ago.

We are asking that they should pay on the double. I wish to leave the Minister in no doubt that that is what he is proposing to do regardless of what he says about the reliefs being given. The fact remains that the farming community are paying as much as £9 in the £ in some counties and are paying substantial sums in all areas. The relief is given because it is regarded as vital in order that the industry should prosper, thus benefiting the economy in general.

This is what all of our handouts and aids to any section is about. We do it because it is the right thing to do, that it is in the general interest. The money spent by the Exchequer on farming has been in a good cause. Agriculture is our largest single industry, it is the largest employer of labour, it is the basis of our entire economy and it is the industry that accounts for the major part of our exports. Yet in this legislation we ignore the fact that our cattle industry is our biggest single export earner and is expected to continue as such for a considerable time in the future, despite the gloomy situation at the moment.

How can we justify the relief of tax on profits earned on exports generated from other sources of industry and, at the same time, introduce legislation at this time that will hammer the farming community? It seems an absolute and total contradiction. We are also ingoring the fact that the risk in farming is an ever-present one and is not solely related to the state of the market for our cattle and beef. There is also the risk of bad weather, and this does not affect any other large industry which is enjoying relief on their export profits.

Is the Minister aware that certain industries in the country have paid more in dividends than the total capital structure of the industry in question? They did not do it for just one year; they have done it for two years and I hope they will do it this year also. In other words, they will get back three times the total output costs in the first three years of their establishment as an industry and they do this on the export market. They are able to do this because they do not pay tax on their export profits and I think that is justified. However, the people who have been practically forced into the cattle industry by the measures adopted by the various Governments have to cope with the crisis that has arisen within the Common Market.

We talk about keeping faith with farmers and other sections of the community, but no section can have the same sense of grievance as the cattle breeders and producers against the background of our recent efforts to encourage them into further production. There were glowing reports from the Common Market but despite the fact that the EEC area is short of their own requirements, supplies are coming in the back door from third countries. The result has been that there is sufficient additional cattle so that we are in the lurch, without as much as an apology from the creators of the situation.

Our Minister for Finance is going to add to that situation by slapping this imposition on the people most concerned. His only suggestion to them is what he said earlier this evening; he told them that it was well for them that they had lost so much this year because they will be able to claim it back against the profits they will make in the time between now and 1975. I hope the Minister will withdraw that statement before it is seriously examined. If he thinks about it I am sure he would not like it to be regarded as a considered statement; it would be better to regard it as a poor joke rather than a serious suggestion.

The Minister mentioned that rates formed a higher percentage of industrial profits than in the case of farming. How does the Minister know this? We do not know what profits farmers have been making as we have not been collecting taxes from them. Somebody on the Fianna Fáil side intervened to inform the Minister on the matter. The Minister said that 77 per cent of farmers do not pay rates on their land. Could we have from him another calculation and statement with regard to the percentage of rates in the profits of farmers when we consider that the total rates paid on land is, according to the Minister's statement, paid only by 23 per cent of farmers? We must relate the rates to those who pay them in the farming community and take it as a percentage rather than a percentage of the total rated valuation of the agricultural land of the country, on which 77 per cent of the farmers, according to the Minister, do not pay rates at all.

An earlier speaker, drew the Minister's attention to the fact that this new imposition of tax on the farming community, added to the existing tax that is being paid to the tune of very many millions, regardless of the millions of reliefs trotted out by the Minister, will put our farmers at a further disadvantage, and I deliberately say "further", with their opposite numbers in the Six Counties and in England. The Minister's reply to that was lacking in reality. I understood him to say that we must look at what the situation is here and that we cannot be looking outside to England or the Six Counties or elsewhere. I say we must have regard to what is being done there. We must have regard to the relative costs of production, the relative overheads, since these farmers are in the Community with us. Since they can be, and in some cases are, our competitors we must have regard to their overheads in relation to ours. The idea that we can close our eyes to what is being done there is just not sensible. We can argue, and it sounds very well, that it does not matter a damn what they are doing outside, that what we must do is keep an eye on our own taxpayers and spread the load evenly here. This is not so and the Minister knows it is not so. The statute books in existence at present are full of efforts on the part of this House at various times and for various reasons to make special provision for people in various enterprises who are in the export market with their produce, to try to put them into a competitive position with their would-be competitors in whatever part of the world they may be trading. The Minister knows this is so and he knows we will be doing it again and again in any context in which we think it is of value to us. It is no use to turn around and say to us here that what they do in the Six Counties or England is of no real concern to us, that we must have regard purely to the internal tax structure and to nothing else. That concept I do not believe the Minister seriously believes, and I totally disagree with it.

The Minister has talked about moral courage or lack of it here this evening. I would ask him to display real courage at this juncture and withdraw the whole shebang contained in this chapter of the Finance Bill. Let us get on to the rest and get finished with it without having to wait until four, five or six in the morning. He need not concede by so doing that what is proposed is, in all respects, wrong or that it is being withdrawn for that reason, but that it is being withdrawn because of the fact that it is no time to add to the burdens and fears of our hard-pressed farming community who have little prospect of their lot improving in the immediate future. This would be real courage on the part of the Minister and would make real sense of his charges this evening that others who went before him did not have the courage to do this, that or the other despite the fact that recommendations were made as many as 14 years ago.

When I heard him talk about the 14-year-old recommendations it struck me that digging it up now and putting it into operation might not necessarily imply courage but could imply many other things that would be far from virtuous, and that in fact the courage was displayed by not accepting the recommendations made 14 years ago. We set up inquiries and we set up commissions but we should not be slaves to them and indeed in the case of some of them it would be very foolish if we were. Those who are set up to sit and inquire into any particular aspect of legislation do not expect that everything they recommend will holus-bolus be taken by the Dáil and put into Statute. They do not expect it nor do we expect them to prepare it in such a manner that it could be so absorbed. If this were capable of being done there would not be any need for this House. We could set up a few committees, give them a life span of 20 or 25 years and the power of co-option, self-perpetuating, and we would never need an election thereafter. We could let them run the whole show. However, we are very far from that. The Minister, in using this 14-year-old recommendation as a justification and indeed as an argument in favour of the courage he is now displaying, could well be hiding behind a recommendation that is 14 years old, 14 years out of date, that is as far from the realities of today as the last century is and that could have misled him and his Government into doing something at this particular time that could be very wrong indeed.

I ask the Minister in all seriousness to consider the general implications without prejudice to future action in regard to applying a taxation code of this or some varied nature to farming profits against the present background of a gloomy present and an even gloomier future for the farming industry at this time. It would be a terrific morale-booster to the farming community if, even at this stage, the Minister were to take that step for that reason and without prejudice to its application or re-introduction at a time that would be more suitable and more hopeful for the community on whose back this burden is now being placed.

It is my belief that somewhere along the line a great deal of pressure may have been exerted by Members of his own party and of the Labour Party on the Government and on him as Minister for Finance to do something about taxing the farmers and those who are speculating in land, companies which were dodging the column and burying their profits in various ways through land ownership. If he thinks he is catching them by doing this he should have another think. I can visualise the full impact of what the Minister is proposing here having the reverse effect on, say, a farmer with a valuation of £120, £130 or £150 who is genuinely farming and who may have built his farm up from a very small beginning over the years and have worked hard to repay the money he expended in purchasing all or part of it, in modernising it, in building and bringing it into good fertility.

These farmers are now faced with the difficulty of getting labour to work as farms must be worked for an unreasonably long number of hours at certain times of the year and working over week-ends, as they must do in the dairying industry, the difficulty of getting a labour force to do this sort of work, added to the soaring costs of every single item which goes into farming today, the alarming rises that have taken place even in the last 12 months, together with the new imposition that is enshrined in these proposals which will bring about the situation wherein the books must be kept and, as my colleague earlier said, the accountant must be brought in.

I know a number of farmers who are very concerned about this particular aspect of the matter and who are seriously contemplating getting out, while they are capable of doing so, and leaving the headaches in the future to somebody else. I can see a lot of genuine, good and useful farmers doing that because it must be known to the Minister and every Member in this House that if the capital value of land were to be realised by anybody with a land valuation of £100 and upwards today, together with the stock, machinery, equipment and so forth, what he could get on the open market for the money he would realise on such a sale would be anything up to five to ten times greater than he is capable of making by working hard on his farm at the moment, and nobody else in any other walk of life would work so hard for any money at the present time.

Is the Minister intent on driving out the farmers who farm not only for profit but because it is their way of life, getting in the big combines, getting in the companies and the bigger units, which are now being sought after not only by the Land Commission, for their own good policy reasons, but by the EEC and all that we hear coming from behind the scenes there? Is this where we are going? Is this part of the pattern that is devised to bring about the situation of the huge farming complexes in the future to the exclusion of the traditional farming community in this country? If those people were over the years and at the present time to measure their profits and set beside that their efforts and the hours they put into the work on their farms and think in terms of how much more they could get by realising the lot and investing their money in gilt edge securities, surely the Minister must realise that these people have a place in the community, that they should be retained, that it is vital they are; and if the time comes when these people are driven out and are replaced by the very type the Minister and his Government seem to be trying to prevent accumulating land in this country, he will be a sorry man then and we will all be sorry but it will be too late.

It is for these reasons that I say again to the Minister in all honesty, no political gimmickry whatsoever intended, that this measure is ill-timed, whatever about being ill-conceived or badly constructed. It should not in my estimation be pursued further at this particular juncture. I believe the Minister can honourably, without any loss of face, withdraw this part of the Bill without prejudice to his actions in the future and do it for the reason that farming as an overall industry is going through a very bad time, a time contrary to the promise we all felt was there a few years ago and which we believe will return. The Minister could thus give a boost to the farming community at a time when they badly need it. It is about the only thing he can give them at this time, particularly in the cattle and beef industry of this country. The Minister stated in another context that the losses made this year can be written off. If the losses are made in the coming year the Minister cannot expect to lose anything by not applying these taxes, so he does not have anything to lose financially. He does not have any face to lose in the matter and he does not have any political side to consider in this matter at this time. He could help the farmers' morale greatly, he would show the courage he has been talking about here this evening, and he would be applauded for it. I think the Minister is man enough to do it. I hope, while he is thinking of saying no at the back of his mind he is still considering saying yes.

Mr. Brennan

I want to put on record my abhorrence and opposition to this measure. I believe the Minister does not want to go down in history as the man who opened the door to tax on farming generally, because that is what this is. There was a ditty some years ago: "Open the door Richard". I hope this will not be the tag attached to the Minister after the introduction of this legislation.

Mr. R. Ryan

We do not believe in shutting the door at any rate.

Mr. Brennan

It has all the marks of a Government devoid of any rural thinking. It has the hallmark of a Government dominated by Labour thinking, by urban-minded thinking and that has no regard whatever for the agricultural community. We had several reports on the income tax system over the years. I remember one report which suggested there should be a tax on farming but we did not act on it. The report admitted that there would be an uproar if this was suggested but they said it could be brought in quietly by applying it to those with a valuation of £100 or over. That is what we are doing here tonight. We are getting the thin edge of the wedge into taxing farmers as they did in England. They started with £100 valuation and today every farmer in England must make income tax returns.

It is a bad day for agriculture in Ireland. It is all right to get up and talk about the incomes farmers are enjoying, but I do not see many rushing into agriculture in this country. This party for years strove to build up agriculture and to stop the flight from the land. We did everything possible to encourage agriculture by incentives of one kind or another, grants and subsidies, to bring the drudgery out of farming and to make it more attractive. When we joined the EEC the farmers for the first time saw a light at the end of the tunnel. While their interests at EEC level have not been very well protected recently we still hope, and the agricultural community are hopeful, that better EEC conditions, as are intended under the Treaty of Rome, will be enjoyed by the agricultural community eventually.

Now after all these years, after all the efforts that have been made to reverse a serious situation in agriculture you have a Government that is dominated by urban-minded people who can snigger and jeer at the farming community and do not give a damn if they are up to their neck in debt, and who propose a new tax to ensure that they will not get their heads above water. The farming community will forever remember this night in Leinster House.

Nobody for a moment believes that it would be confined for very long to the £100 valuation limit. Any of us who have any experience of the brilliance of the Revenue people— and I do not say that with any sarcasm—realises their resourcefulness in coming up with suggestions for new means for raising taxes, and any Government can find means of spending the tax, and that the limit will be dropped from £100 until every farmer in the country is eventually brought in. That is what we are doing here tonight. That is what those who will go into the lobbies to support this Finance Bill are doing. It is a sad day for Ireland.

It can be easily pointed out that other countries impose tax on farmers. I am sick listening to talk about what other countries are doing. I do not think that in the field of agriculture there are many countries comparable to this country.

We are unique in being so largely devoted to agriculture. We were unique in that we had no tax. We were exempt under the 1969 Act. This is a reversal. I am surprised at the rural Deputies, some of them farmers and some of whom were very loud in their condemnation of Fianna Fáil at the time when the NFA were blocking the roads. I remember being held up six hours in Navan on one occasion. I could not get to this House because the roads were blocked by the NFA due to something simple that was not operating to their benefit. That was politically instigated and exploited to the last at the time by those on this side of the House. Those people who are posing as the champions of the agricultural community, where are they tonight? There is scarcely one of them to be seen in the House since this debate began. Looking back over the years, I believe no condemnation could be loud enough or strong enough to put on the record of this House as to how we feel about the imposition of this tax on the agricultural community.

There was a decline in the number of people employed in agriculture to the extent that no matter how rapidly we could increase the industrial production and industrial development in this country, it was unable to absorb the fall-out from agriculture. Now we are making sure that when agriculture gets its head above water we are going to skim the cream of anything they are likely to get after years of struggling and suffering in trying to achieve some social standing and financial independence in our economy.

I would like to hear the Minister say that is forced upon him, because I do not believe that he is happy about the situation either or that many others in the House are happy about it. Further, I do not believe that many in this House would come with the Labour mentality in relation to taxation generally. As an indication of the feeling there was at any hint of taxing farmers, I can recall a Senator we had one time—the man is long since gone to his reward, Senator Quirke—who made some reference in the Seanad years ago to the taxation of the farming community. It became a slogan quoted on every Fine Gael poster and advertisement in the country for many elections afterwards. It was so distasteful and so abhorrent to the community that even when a Senator would suggest that there was a possibility of finding tax by resorting to the taxation of farmers, we were scourged with the statement for which we were not even responsible. The same people who exploited that situation are the people who introduced this tax.

We introduced VAT as the best means of ensuring that everybody in the country paid his or her fair share of tax. If there was any excuse for extending taxation to a new section of the community before VAT, there is none now. There are many people paying tax three times from some of the products they are handling. Indeed, when VAT was recommended to the Government at the time, one of the selling points that appealed to me most was that it would obviate the necessity of turning to new sources of revenue and tax.

This again illustrates the resourcefulness and the able minds of the people whose job it is to suggest means of raising taxes. A section of the community who were beginning to feel their way out of the misty past and the darkness under which they laboured will now find a new obstacle to ensure that they will not get their heads above water. This awful depression that has hit agriculture now is only temporary, but that this time should be chosen to oppose tax on farmers makes it all the more difficult to understand. It is inexcusable to introduce such taxation at a time when agriculture is calling out for assistance, is screaming for aids to offset the losses farmers inevitably faced last year and this year.

I do not know if the members of the Government have any real idea as to how the agricultural community has to live. Agriculture is in no way comparable with other sources of livelihood. The instability of markets is only one of the more serious hazards. It is virtually impossible for a farmer to budget for a year ahead. Farming is a continuous battle against all sorts of hazards—the weather, animal and plant diseases, world conditions. The farmer's day is not an eight-hour one. His week is not a 40-hour one. Sunrise to sunset usually marks the day for the agricultural worker, and if he is not making use of every hour of light he is not likely to exist. He has to deny himself many of the pleasures that are available to the 9 a.m. to 5 p.m. worker who can sit down and decide on ways and means of making and spending money.

Until recent times the social standing of the agricultural community was the lowest in the country. Members of the farmer's family were sent to college and it was usually the fool of the family who was left to look after the farm. Farming was regarded as the step-child in the economy.

We in our time on that side of the House produced many incentives for agriculture. The agricultural community responded. The expansion of educational services for the agricultural community was regarded as one of the most important projects that the Government could undertake and to get farmers to make adequate use of the facilities. An Foras Talúntais played a very important role in getting people to understand the better use of agriculture, in the development of agricultural education and appreciation of the need for it. In general, we had broken through in the battle to bring agriculture out of the doldrums and into a position where there was hope that the flight from the land might be arrested and agriculture would not be regarded as the underdog in our economy despite the fact that it was our principal source of exports and this being an agricultural country was one of the reasons why we were able to exist at times when there was very little else going for us in the way of exports.

We should not easily forget the importance of agriculture as the mainspring of our economy. We should be mindful of those who worked hard to bring agriculture to a high level of development. The day when any Minister, with so many sources of revenue having been made available to him, should turn to this last source of revenue will go down in history as the day when agriculture was given a blow from which it reeled. That any Minister should do so is inexcusable.

I do not expect members of the Government to have any sympathy for farmers because they are not concerned, they are not interested in rural life; they have no knowledge of agriculture; they have not been brought up on the land; they have no background experience of the drudgery and slavery that attach to agriculture. Their backbenchers who might be interested or who might have a practical knowledge of agriculture are ineffective in advising the Government with regard to agriculture. That is perfectly obvious.

I do not think that anybody who has been in touch with the agricultural community since taxation of farmers was mooted could say that he got any encouragement from any section of the agricultural community in relation to this proposed taxation. The farmers spelt out the alternative. That will arise in the course of the night on other sections. The alternative that was proposed has not been listened to. Therefore, the tax is unjustified and is without acceptance by any person representing the agricultural community.

The county of Donegal would not pay much tax under the £100 valuation limit and that is one of the reasons why that limit is now being set as a means of getting in the thin end of the wedge of this distasteful tax. I am perfectly certain that not many years will have elapsed when a proposal for the reduction of that limit, if not its complete abolition, will be made to whatever government may be in office.

Holdings of various sizes are necessary in a successful agricultural community. It would not be a successful agricultural community if all holdings were arranged in 100 acres or 60 acres or 20 acres. It is necessary that there should be large, very large and small holdings to carry out their own particular type of agriculture, to fit into the scheme of agricultural development. It is necessary that there should be grassland, tillage farming, intensive farming on smaller holdings, even bloodstock breeding. It is not the intention behind this tax to single out one particular type.

Why should the man with the £99 valuation not pay just as the man with the £100 valuation must pay? For that matter why does the man with the £98 or £97 valuation not pay? There has been a suggestion that farmers with a £50 valuation are doing well. There is no doubt in my mind of what will ultimately happen in relation to these taxation proposals.

We can expect that the Government will use their majority in the House to steamroll this through in spite of the fact that 90 per cent of the people on that side of the House do not believe in it. It is now a Government decision and it has to be pushed through. We are going to have the farmers from tonight onwards starting with a £100 valuation limit. I should like to hear one Member on the Government side give us an assurance that the limit will not be reduced below £100 valuation. I feel sure that the people in rural Ireland have not asked them to support this measure.

That is the reason why I want to put on record, on behalf of the agricultural community, most of whom as far as as my representation in this House is concerned will not be affected by this legislation immediately, that they see the writing on the wall as plainly as we can. It is only a matter of time before they are all brought into the net and they will have to make their own contribution to the already heavy burden of taxation which is weighing down the people of this small island. To find money to spend in a Government is the simplest part of Government.

Mr. R. Ryan

I agree with the Deputy.

Mr. Brennan

But to find means of raising it is most difficult. The Government must decide what load the people can bear at a particular time and spend according to that. There will soon be few means left for raising money. One means left after this legislation goes through is to drop the limit year after year and bring more farmers into the net. The Government sees that as a fruitful source after a time but I think this will rebound on them, it will boomerang. Nothing that the Government have introduced will hit rural Ireland more adversely than this proposal. Rural Ireland will rebel and take the first opportunity to record their detestation and disapproval of what the Minister is proposing.

Mr. Sheridan

As a person who is unique in this House, one who has been elected by the votes of farmers big and small since 1961, one who has faced the electorate independently on every occasion and one who is proud to say that he was born and reared on a small holding in north Longford, I consider I have a genuine knowledge of what the farmers desire. I should like to remind the Minister, as a person who will not use political gimmickry in any circumstances, that in my young days I was a member of Fine Gael. It was always quoted to me then what the late and respected Deputy Patrick Hogan said, "One more cow, one more sow, one more acre under the plough".

I should like to ask the Minister if he feels that after introducing this taxation system the farmers will have one more cow, one more sow or one more acre under the plough. Does the Minister want progress? The farmers of Ireland were never found wanting if they were invited to put their cards on the table. They have fought many wars, the Economic War, and even went over to join John Bull. They may not have received much thanks for this but they did their job.

These are the people who are now being harassed by the present Minister for Finance. I do not like being offensive in this House, nor do I want to sound political, but I should like to remind the Minister that farming is still the traditional industry of this country. We have now modern means and machines for farming. We have gone a long way in recent years and we have been helped by successive Governments introducing various schemes. Surely in 1974 it is not hard to realise that there is a greater depression in this country than there has been since the days of the Economic War. Surely when we have farmers giving away calves which last year would have fetched £60 or £70 there is something wrong. This is not the time to tax these very depressed people.

I should like to remind the Minister that if this goes too far there will be a revolution. We were near the point of revolution before when another Government was ruling. At that time it would have been a good job for that Government to meet the people concerned. We were on the point of revolution then. Deputy Brennan mentioned that he was held up for six hours in Navan and I was held for up to five hours on a main road to Dublin by combine harvesters, bulldozers and tractors. That could happen again. I am not inciting anyone to do this but if it were not for the French farmers and their case the cattle trade of this country, which is our main source of livelihood, would be much worse.

We have gained benefit whether through our Minister for Agriculture and Fisheries or not. We have gained a little because of the actions of the French farmers. This House should realise that when the farmer goes well everybody goes well but when he is faring badly everybody is hit.

The point I am trying to make is that this tax is being imposed at a time of absolute depression. It is something which will not be easily accepted by the people, and when the people make up their minds that they are not going to permit something to be forced upon them this just will not work.

I would like to remind Members that we were told that, when we entered the Common Market, there was a ten years' shortage of meat in Europe and all we need do was get in and there would be no getting out; we were on the road to prosperity forever. It just did not happen that way.

Mr. Coughlan

Who told the Deputy that?

Mr. Sheridan

Who told me what?

Mr. Coughlan

That he was on the road to paradise.

Mr. Crinion

Fine Gael.

Mr. Coughlan

It was the former Taoiseach.

An Ceann Comhairle

Order. Deputy Sheridan, without interruption.

Mr. Coughlan

I know more about it than the Deputy does because I was bred out of it.

Mr. Sheridan

Could the Deputy not have some manners? They are something he has never had. This Bill may pass through this House. I certainly will not go into the "Tá" lobby in connection with this Bill and it will certainly not be accepted by the people down the country. Again, I ask the Minister how does he or anyone else propose to implement these provisions? I just cannot see that happening. Does any Member read the agricultural supplement in The Irish Independent on Saturday? Does any Member read the Farmers' Journal or any publication dealing with agriculture? Will they get it into their heads that agricultural land has dropped £200 per acre? Is that not an indication of how things are in the country at the moment?

(Interruptions.)

An Ceann Comhairle

Order Deputy Sheridan is in possession and he must be allowed to speak without interruption. The Chair would remind Deputy Crinion that the Chair is desperately trying to restore order.

Mr. Sheridan

I have my facts and I know my facts. Any terrier that likes to bark at me here or anywhere else can bark. It does not matter a damn to me. I came into this House on my own and I will leave it on my own. This is the most unfortunate time for this sort of provision to hit the farming community. I am wondering if the Minister is aware of the fact that over the last 12 months fertiliser prices have risen by 400 per cent. I am not blaming the Minister for this. Binder twine has risen by 200 per cent. The price of machinery parts has risen. Everything the farmer needs and uses has risen in price and there is nothing there to recompense the farmer for these increases, absolutely nothing. This time 12 months calves were fetching £60 and £70. You are lucky today if you do not find a calf in the boot of your car when you go home.

It is said the milk farmer is doing well. He has done well, but I would remind Deputy Coughlan that the milk farmer puts in, not a nine to five day but an 18-hour day. The cows have to be milked 14 times a week. If a cow gets mastitis or brucellosis the farmer is at a loss. I am not blaming the Minister; he does not give the cow brucellosis or mastitis. I blame the Minister for Agriculture and Fisheries and his predecessor. If a cow is affected with these diseases the farmer is down at least £150 and the calf is down maybe 200 per cent. These are things that affect farming generally. I would not speak here if I did not have my facts and, because I have my facts, I defy interruption from either side of this House.

I know the Minister is a reasonable man but he could not introduce these provisions at a more unfortunate time. With regard to the £100 valuation, I do not know who the valuer will be or where you will finish up with the £99 against the £100 or the £100 against the £120, but I can assure the Minister that, the moment the valuers come down the country, they will be met with the pike and the fork in the same way as others before them were met with the pike and the fork in the bad old days and I guarantee that 5p of that tax will never be collected.

Mr. Crinion

The Minister said that the Fianna Fáil Party, when in Government, neglected to pay heed to a report made in 1961 recommending taxing farmers. It was he and his colleagues who pointed out in the 1960s that farmers were earning only £4 to £5 per week. How could any sane man take tax from people earning as little as that? That was the question posed. The report suggested starting at £100 valuation and then going down. The Minister has three forms of valuation. He has income tax for farmers over £100 valuation. If the farmer has a job or he or his wife has a 25 per cent interest in some firm, or his wife is working and he is over £50 valuation, he must keep books and return them to the Revenue Commissioners for tax purposes. That leaves a gap. I suppose next year we will be down to that for everybody.

Then there is the poor uneconomic farmer with a valuation of £20. He or his wife may have had to go out to work to sustain their family. If that farmer has a valuation between £20 and £50 he loses half his allowances for income tax purposes. The Minister said that 9,000 extra people will be coming into the taxation net. In my view, more than 9,000 people will be caught in the net because people with a valuation of £50 and the small farmers who must go out to work because they are unable to make a living from the farm will be caught also. The small farmer now goes to work as a result of the Fianna Fáil policy of providing industries in rural areas.

The farmer is being taxed but not the man with the stallions. The Minister said he was trying to keep the stallions in this country and if he did not give this tax concession they would be sold abroad. Two of the best known racehorses left this country within the past month. Even though the Minister has given a tax free incentive to owners they still sold those horses abroad for more than £1 million. There are horses here who are syndicated at over £1 million. Their stud fees are tax free. When one compares that with the poor farmer whose family has been ekeing a living from the land for generations with these horse owners, one realises that there is no justice. This Dublin-based Government enjoys all the facilities of modern day life: running water, sanitary services, good roads, television and educational facilities, while the poor farmer must struggle to survive.

The revenue from these horses is tax free. It has been calculated that an owner will get the full value of the stallion from stud fees in three years. Before one of his progeny races, the owner has got back the money he paid for his stallion. Now we have a Dublin-based Minister letting that money go tax free. What section of the farming community could say that they will get their capital returned inside three years without paying any tax? The progeny of the stallion might not even have been in a race but still the owner will get back all the money he paid.

The Minister said that everybody should pay his fair share of taxation. It seems strange that he should let people away without paying tax on such high sums. Stallion owners will get £8,000 to £10,000 for each mare that goes to them. In the first year there will be 25 mares and after that 40-42 mares each year. As anybody can see, in three years the owner will have £1 million back without very much cost for keeping the stallion for those three years.

Farmers have felt over the years that they were paying a form of income tax—the rates. They paid a set figure every year which bore no relationship to their incomes. In the mid-1960s farmers were pressing for income tax on the understanding that the agricultural land be rerated on farmers who would be paying income tax similar to the system in England and Northern Ireland.

The Minister said that industries are paying rates on their premises. This is wrong. A farmer with a valuation of over £100 paid 8 per cent of his income on rates in 1972. A farmer with a larger valuation paid 13 per cent or even 15, 16 or 17 per cent in 1972. In industry the average rate of their gross income which they paid was 5.7 per cent. Take the comforts which the industrialist and his workers have. The services with which they are provided from rates bear no relation whatsoever to those with which the farmer is provided. In quite a number of cases you will find he has a bad road running down to his land; he may even be lucky to have a tarred road. The road is widened for every factory and all the services provided to try to induce them into the area. But the farmer has been paying for this without being provided with any of the services one would expect from local authorities. One can conclude from this that the farmer is paying a much higher rate on his gross income than is the industrialist. It is highly unfair to take a farmer of £100 valuation and start taxing him when he is already paying a much higher rate than the industrialist or the urban dweller who has no sympathy with or understanding of the farmer.

Since this debate commenced the amazing thing is that not one of the rural or farming Deputies—I see one of them sitting up there at the back——

Mr. McDonald

The Deputy will hear us in a few minutes; he would want to make that correction.

Mr. Crinion

We heard nothing at all about the poor farmers who elected Deputy McDonald to the House here and yet he was trying to say, during the last election campaign, that he was their champion.

Mr. G. Collins

Mr. Oliver Havercamp will do you; Deputy Oliver Havercamp——

Mr. Crinion

He is Blessed Oliver now.

Mr. J. Gibbons

There is only one more miracle to be worked. He is on the list.

Mr. Crinion

You will know when you go to the electorate possibly this year, or early next year, when this Government breaks up. Deputy McDonald will have some job telling the farmers how he taxed them and did not speak even one word in their defence.

Mr. McDonald

We cannot get a chance with you people hopping up all the time.

Mr. Crinion

One sees industrialists paying 5.7 per cent only of their income in rates and what services are they receiving? As well as that their export profits are completely tax free. The greater portion of agricultural production is exported. Yet the Minister has nothing in his Bill to give relief to those farmers, or to the industry itself, exporting so much and importing so little. Practically all of the raw materials are derived from the land itself. The exports being provided by the agricultural industry have not been taken into account good, bad or indifferent. Where would the country be were it not for those exports? As it is, the Minister is in trouble with his balance of payments. How much more difficulty will he be in when the exports of cattle and cattle numbers in the country start decreasing? Calves which were fetching £80 and £70 last year are making at a maximum £20 and some of them are not even making that. As has been mentioned here, some of them are even being given away as gifts. I know of sales yards in my constituency where the calves are left behind in a sale, their numbers ripped off and not a farmer will take them. All the auctioneer can do is bring them up here to the Zoo to be fed to the animals. It is sad to see that sort of thing happening and it is happening on a wide scale, as has been mentioned by some Deputies. They have been given away or put into one's trailer and, when one gets home, one finds one has more calves than one started out with.

Mr. J. Gibbons

Official policy.

Mr. McDonald

Is there any danger of you over-feeding them in the Zoo?

Mr. Crinion

It would be no harm if some of you lads were sent up there because you know as much about farming as do the lions and the monkeys. All you want to talk about is contraception. Nothing is said in defence of the farmers of Laois-Offaly who elected Deputy McDonald and then he talks about representing the farmers of Ireland in Brussels. Not one word did he say in defence of them or in protest at the unjust taxation being imposed on them.

The industrialist also benefits from export tax relief, something which is not passed on to the farmer, the farmer who has been exporting his commodities over the years. We should be inducing the farmers to export more, to increase cattle numbers and increase production off the land, because a 5 per cent increase in cattle numbers or production on the farm is a very big one.

It has been pointed out that the farmers are losing money this year. The Minister admits that they are losing money and the argument put forward is that they can place those losses against next year's profits. I ask the Minister how are the farmers to live with losses? He should ask his colleagues in the Labour Party would their members accept no income.

Mr. J. Gibbons

Let them eat cake.

Mr. Crinion

Yes, Richie Ryan's cake. The farmers will get no profit this year and yet they are being told they can put that against whatever they may receive next year. I know the farmers will be marching, that there will be strikes and there will be no production whatsoever, but that is the sum total of the sympathy the Minister has for the farmers.

We had the national wage agreement to ensure that all the workers —and we fully agree that there should be national wage agreements— received an increase this year. They will be receiving another one later on. But the poor farmer is to be stuck in the mud, lose money this year, then be taxed, if he has an income, and he can place his losses against whatever profits he earned last year. It illustrates how much sympathy the Minister has and how much he really knows about the farmers.

Mr. White

It has certainly been——

Mr. Taylor

Do you people remember that you did not want our cattle exported to Italy last year?

(Interruptions).

Mr. White

You can absolve yourselves from that; but you remember it well.

Mr. G. Collins

Deputy Taylor is welcome back from the Holy Land.

Mr. J. Gibbons

The voice is the voice of Esau.

Mr. Taylor

Do not belittle members of your own party.

Mr. White

It was certainly very interesting to hear Deputy Crinion speak. I was amused to hear him say that he thought racehorses and stallions should be taxed and I shall take a special interest in listening to what Deputy Haughey will have to say in reply to that. I think this racehorse business is a very chancey one and I think it is quite right that it is exempt. I am a practical farmer as well and I think I know what I am talking about just as well as Deputy J. Gibbons.

It was very interesting to hear previous speakers mention the flight from the land. They should realise that in the 14 years up to 1972 some 14,000 people had to leave County Donegal. It was not those with a valuation of more than £100 who had to leave; it was the smaller farmers who had to leave the county. This tax will not interfere with their income.

Have the single farmers forgotten that it was the Fianna Fáil Government who are now in Opposition, who took the dole from the small farmers. Once again it was the small farmers who got the knock. These things seem to have been forgotten but for the short time I shall speak in this debate I do not want to become political.

I personally think it is right that farmers with valuations in excess of £100 should be taxed. It is quite wrong that single men who are earning more than £10 a week are taxed while, at the same time, farmers have made thousands of pounds without paying tax. There is no point in our being hypocritical about this matter. We want fair play for everyone, we want all sections to have a fair share of the cake. It is quite wrong that a single person earning £12 or £14 per week has to pay income tax while the wealthy farmers are not liable for tax.

It is easy to say that a Bill such as this which intends to tax farmers is unacceptable. Of course it is unacceptable—any new form of taxation is unacceptable. The 2½ per cent turnover tax was unacceptable as was the 5 per cent VAT. I am one of those people who will be personally affected by this new tax and I know that many similarly affected people will find it unacceptable. We must be realistic and try to give a fair share to everyone.

There has been much talk about the recession in the cattle trade. Some people have said we should not have entered the EEC. Had we not entered the Community, the farmers would be getting a price in the region of 22p per pound for their cattle. I am the first to admit that it is a bad year but we must be realistic and say the farmers have an option. If the farmer has a valuation in excess of £120 he is quite entitled to put his full losses against his profits, the same as any business. He is entitled to claim depreciation of machinery, to claim for the money spent on fertilisers, for contract work and any other expenses.

We should define exactly what is a farmer. If a man has a valuation of £90, if he is classified as a commercial farmer if he keeps perhaps 500 pigs or 10,000 poultry? Is it right that he should be exempt from tax? It is easy for me to speak because very many farmers in my area will not be affected by this tax, although I personally will be involved. It is only fair that we should have a just system for all who pay income tax.

Mr. Callanan

I can speak with authority on this matter because I was reared on a small farm. I worked on the land and I know all about it. During the Second Stage debate I said farmers had no objection to paying taxes provided their earnings justified it. I also stated that taxation by valuation was the most unjust form that could be devised because of the variation in valuations. I explained the reason valuations were higher in some areas. In the old days when there was the Grand Jury some landlords did not qualify to get on the jury because their valuations were not high enough. They applied to have the valuations raised at a time when the rates were only one penny in the £. This unjust valuation was carried on and this is the reason for the wide variation throughout the country. It can be seen from this that it is most unjust to assess a person's liability for taxation on the basis of his valuation.

Deputy White said that it was only those who had valuations in excess of £100 who would be affected by the tax. There are people in my area who have herds of 100 cows whose valuations are approximately £20 but, on the other hand, there are people in the Shannon area whose land is flooded for half of the year but it is valued at £2 per acre. Thus, a man with 50 acres would be caught by this tax even though he might be classified as a development farmer.

There would be some sense if the farmers were classified in the three categories. I accept that the commercial farmers should keep accounts but it is wrong to include the transitional farmers. If the wife of such a farmer is earning she will lose half her personal allowance. Is this not a case where the farmer's income is being cut, although such people have been advised on many occasions to have employment outside the farm? Yet, if their farm has a valuation in excess of £20 they are affected by this measure. I can assure the Minister that a farm with a valuation of £20 is a very poor farm and one that would not give a decent standard of living to the farmer. Liability to tax will also apply to those whose valuation is £50.

I represent the smaller farmer and many in my area will not be affected. If a person is taxed, it is grossly unfair that what he pays in rates is not deducted from his tax liability. We should not apply two methods of taxation to any person. It is most unfortunate that the Minister chose this year to introduce this measure. As Deputy Sheridan pointed out, we do not want to make a political football out of this matter. We cannot change the international situation but the outlook for farming was never more bleak and never were people so worried.

Many people borrowed money. The minute we went into the EEC all one had to say in a bank was that one was a farmer and one got money for development. Deputy Sheridan quoted the price increases for fertilisers et cetera in 12 months and how the farmer's income has fallen. None of us in this House likes to talk about that situation. It would be better for all of us if we had a brighter picture for the farming community. The quicker the town dwellers get it into their heads that if the farming community are poor they will be poor, the better. This is one of the things that is not being stressed sufficiently.

I know there are not many rural Deputies in the Government. I have sympathy with the Minister for Agriculture because I think he is doing as good a job as he can but he cannot get across to his Government the serious situation that exists at present. I can see no light in the future. I am not blaming anybody. This is something that has happened.

Things have just gone wrong and no expert has told us that they will be right in six months' time. The future is bleak for the farming community and this will affect the cities and towns because the farming industry is one of the most important industries in the country. If it goes down the whole economy goes with it. It took years to build up confidence in the farming industry. Some of us who came into farming organisations years ago know that. James Dillon made a famous statement that at one time the farmers were the hewers of wood and the drawers of water. I believe they were. The farming community at that time suffered from an inferiority complex. The farming community was just beingning to have confidence in themselves and a certain amount of confidence in the future. It is as if a platform was pulled from under them. I am not making a political football out of this. There may be international reasons for it but it has happened. If the Minister is going ahead with the taxing of farmers I would ask him for God's sake to take into consideration that if a man is paying rates the amount of his rates should be deducted from his tax. I would also make a special appeal to him on behalf of the development and transitional farmers. I would ask him not to include those in this at all. The target for a development farmer is £1,800 per labour unit. I do not know whether this can be achieved by many farmers now with the reduction in livestock prices. If the instructor thinks a farmer cannot achieve that target he is no longer a development farmer—he goes into the transitional category. It seems ridiculous to give a farmer grants on the one hand to bring him up to industrial standards and to tax him at the other end. Those categories should not be in the net. The farmers fear this is only the thin end of the wedge. I am trying to be constructive. I know this Bill will be passed whether we like it or not. No man should be taxed twice. If he pays rates the amount of rates should be deducted from his income tax. Neither the development nor the transitional farmer should be included.

I feel I am entitled to speak on this. I have been all my life a practical farmer. I had no other way of living. I will not go back on what Deputy Sheridan said about the different types of farming. The sheep trade has collapsed as well as the cattle trade. The only thing left with any reasonable income is milk but milk is a slavish job. It is something that some people would not dream of going into. Deputy Sheridan mentioned the number of times a cow must be milked in a week. Would any other class in the country be prepared to work the long slavish hours which a farmer must work if he is in milk? I am afraid we have not got enough men in this House who have actually done the work on a farm. Those of us who have know what we are talking about. I sincerely appeal to the Minister to remove those two categories from the net and to ensure that the amount of rates is deducted from the income tax.

Mr. Leonard

As a Deputy who represents a constituency where the £100 valuation is the exception rather than the rule I would like to make a plea to the Minister to rethink this idea of taxing farmers at present. I believe he was ill-advised to embark on this system of taxation at a time when production costs are soaring, when the farmers' bills for fertilisers, feeding stuffs, sprays and all the other production expenses have exploded. In the last 12 months there seems to be no control at all by the powers that should control those prices. Added to that you have the dwindling returns from the farm. Farmers who are engaged in suckling or in store cattle production are unable to recover production costs never mind pay tax. This seems to be the thin end of the wedge. Many people who purchased holdings had to secure off-farm employment to pay for those farms and to rear their families.

They will now be faced with this added burden of tax. It has been said that some of the best farmers at present are those who also have an off-farm job. Deputy White mentioned a farmer with a valuation of £100 with a pig enterprise perhaps of 500 pigs. If such a person were to be taxed at present it would be on losses rather than on profits. To tax farmers on the poor law valuation is very unfair. The Minister would have been better advised to take a look at the valuation system. It is outmoded and needs to be examined. In areas of the county I represent it was based on flax production. That was the system on which poor law valuation was based at that time. It meant that some of the heavier soils and the less fertile soils suitable for flax production were based on very high poor law valuation. The Minister should not have been stampeded into this tax on farmers. It probably was pressure from his colleagues in the Labour Party but they should have resisted that pressure at a time when farmers, apart altogether from being unable to meet extra demands at a time when there is so little confidence in farming. This was a cruel blow.

Dr. Gibbons

I would like to restate what Deputy Callanan stated from another point of view in relation to the modernisation farmer or the development farmer. It seems highly illogical to me, after so many years trying to develop farming and giving them confidence in the work they are doing, that we should now propose to tax them. I take it that the Minister has definitely made up his mind on this and having done so I think there is an obligation on him to try to establish a new basis for this taxation as distinct from the taxation of industry. It is a totally different type of activity. It is subject to the weather, to different types of land ownd by different farmers and to the different land values, as pointed out by other Deputies. All those things should be considered.

I would like to make a point which has not been made by anybody else. I refer to the losses which a farmer suffers due to the death of his animals. This occurred in many places last winter. Many farmers lost animals. Some of them even lost up to 75 per cent of their production capacity. If we assume those people paid income tax I take it those losses would be allowed and their assessment would probably be 26p in the £, which would be one quarter of what their losses are. If a man was unfortunate enough to lose all his herd, allowing him a quarter of this for tax purposes is not sufficient because he has lost all his capital. He has nothing to start with the following year. It is absolutely essential that whatever basis of tax is finally established for the farming community it must be designed in such a way that he will have some clawback if he has paid tax on a previous occasion or he will have a clawback for the future over a number of years.

This is a totally different thing to saying that he can apply his losses over the five years. As I understand the tax system it would only in fact be the taxable amount he would be allowed. This is a different situation to that of the industrialist. If, as a result of a fire, the industrialist finds his means of production has disappeared overnight he is usually covered by insurance so he is able to start again. The farmer has no such insurance to cover his stock. An industrialist may find that markets are receding and there is some recession. Here again he can sell at a lower price. He may be selling under cost but he is not at an absolute loss. He has something to salvage out of his work. The farmer who loses all his animals through disease is not in a comparable position. This is the one point I would like to make at this stage. The other things I would like to say have been said and I do not believe in repeating them.

Question put and agreed to.

SECTION 15

Question proposed: "That section 15 stand part of the Bill."

Mr. Colley

In subsection (1) of this section it is proposed to apply the tax to profits or gains from farming. I understand there has been some discussion either with the Minister or his officials in regard to the manner in which the valuation of stock will be treated, whether the notional value of stock before it is sold is to be treated as the income of a farmer. I am not quite sure what has emerged from those discussions but it would be desirable to say the least, if the Minister placed on the record of the House now the manner in which it is proposed to deal with that problem when dealing with the application of income tax to farming.

Mr. R. Ryan

The position here is that this is one of the areas where consultations are not yet completed. We would like time for further study and this has been explained to the farming organisations. I think they accept that this is an area of some delicacy. The truth is it might well suit a person to take in one year the value of his stock at the commencement of the year and the value of it at the end and in another year he might prefer to have the tax based on the stock actually sold and the profit realised on them. As we have said it is a complex matter and one that has not been finally determined. We hope in the course of the next few months to be able to resolve this matter by agreement between the various farming organisations and the Revenue Commissioners. Obviously, this is a matter which does not arise in its finality with any impact until the end of the year when the question of the year's profits have to be ascertained.

Mr. Colley

In view of the fact that the discussions are still proceeding I cannot press the Minister to put the matter any further but I can assume that the approach to be adopted will, as the Minister indicated, be one, hopefully on which there will be general agreement and not simply a dictated form of approach based on administrative convenience. I assume the Minister will approach it in that way.

Mr. R. Ryan

The Deputy knows me to be a reasonable man who believes in proceeding with co-operation.

Mr. Colley

Let the Minister not test me.

Mr. G. Collins

That is what he is afraid of.

Mr. Haughey

I would like to draw the attention of the House to the wording of subsection (1), indeed to the words which occur in the first line. The wording is significant. It states:

Subject to subsection (3), all farming in the State shall be treated as the carrying on of a trade.

To those Deputies who have spoken against this whole idea of the taxation of farming and the manner in which it is taken in Chapter 2 these words should be of special significance. Many Deputies have indicated that they regard these proposals as simply the thin end of the wedge. I think that feeling is widespread outside this House also. Many people are adverting to the fact that in Great Britain when the establishment wished to introduce taxation on farmers they proceeded about it in exactly the same way as the Minister for Finance is doing in these proposals. They first of all introduced income tax for farmers who had a valuation of £100 or more. Then when they got that across and when it was in force for some years and had come to be accepted as a fact of life, they then in due course extended the provision to cover all farmers.

It is quite clear to me that that is precisely the course of action which the Minister is embarking upon. He feels it would be politically impossible to introduce income tax for all farmers at this stage, so he is proceeding to do it by this softly softly, step by step, method.

I would point out to the House and to the farmers' organisations that the wording of subsection (1) clearly indicates that that is the purpose. The approach by the Minister in this section is to introduce an omnibus, overall provision that all farm income is taxable and then proceed to exclude certain farmers for the time being. Let us be absolutely clear that it is only for the time being that these exclusions exist in this Bill. If it were not so, the approach should be completely different. He could set about specifically taxing the farmers he says he wants to tax, this mythical body of large-scale, wealthy, prosperous farmers. It is significant that his approach is to say: "All farming is subject to taxation, and I am for the moment, for political reasons, excluding farmers who are under £100 valuation in certain circumstances, and farmers who are under £50 valuation in other circumstances, and farmers who are under £20 valuation in other circumstances."

It is quite clear to me at any rate, knowing something about the way the machine works, that what is involved here is to bring these proposals in in this sort of indirect way to start with, and ultimately to abolish the various exclusions and apply the proposals to all farmers. In addition, section 16 clearly gives further indication of that thinking. As Deputy O'Malley pointed out very clearly on the Second Stage, the £100 is significantly breached by the proposals of section 16.

Mr. R. Ryan

But there is nothing in what Deputy Haughey has said except his own mischievous suggestion. He has deliberately omitted the first four words of the subsection to which he refers. The first few words there put in the proviso which qualifies what he has said. It is there in black and white. It says: "Subject to subsection (3)."

Mr. Colley

He read it out.

Mr. R. Ryan

No. He started off by saying that all farming in the State was in.

Mr. Colley

He did not.

Mr. R. Ryan

I beg to differ. Deputy Haughey said the important words were "All farming in the State."

Mr. G. Collins

He said the important words were the words contained in the first line.

Mr. R. Ryan

The important words of the first line are "subject to subsection (3)".

Mr. G. Collins

Which he said.

Mr. R. Ryan

Subsection (3) says: "It shall not apply as respects any year of assessment." If it was only for one year, as suggested by Deputy Haughey, we would have said: "It shall not apply in the year 1974-75", but we said: "It shall not apply as respects any year of assessment". Again, Deputy Haughey wants to frighten the 200,000 farmers in this country. It is significant that they were not frightened by all the Fianna Fáil propaganda during the local elections, or if they were there would have been a massive landslide by the rural community, but thanks be to God they are people who know the facts of life and who understand plain language and they know whom they can trust.

There are 200,625 farmers in the country on the basis of the latest known statistics. Of those the number with rateable valuations in excess of £100 are 8,120. The number who have rateable valuations in excess of £50 and under £100, who are professional men or who have businesses or other income, is estimated to be in the region of 7,000. The total number, incidentally, in that valuation bracket is 20,565, but of that it is estimated that the maximum number who would have other income would be 7,000. Therefore the maximum number of people who have profits from farming and who are affected by our legislative proposals to tax farming profits is a mere 15,120 out of 200,625 farmers.

I have been criticised, and I say fairly criticised, because the proposals do not go further. I have been criticised by people who say we have not spread the net wide enough. But we deliberately cast the net over the people about whom it cannot be reasonably said we have not got the capacity to make a contribution towards the revenue by the system of income tax. Never was a more gentle, a more carefully refined tax introduced, never was a new tax introduced about which greater care was taken not to apply it to people who might have to suffer hardship by reason of having to pay it.

If, alleged, people in this comparatively fortunate group—and I think people with property of this rateable valuation are comparatively more fortunate than people who have a lot less—make losses on their farming activities this year, they will not be liable to tax. That is axiomatic. Income tax is related to capacity to pay. That is one of its virtues and the system will be one which will enable them to set off losses against future gains. Of course this, as is typical of Fianna Fáil meanness, has been twisted into a suggestion that the Minister for Finance is rejoicing in the possibility of the farmers making losses this year. It is quite the contrary. If they were all assured of making a handsome profit, the yield from income tax would be so much the greater. However, I am stating as a fact which cannot be contradicted by anybody and which must be a consolation to people who may make losses this year, that income tax will in no way draw any money from them. If they make losses they cannot be liable to income tax. That is a simple fact of life.

Therefore, I wonder if we could have just a little bit of reality in this debate, less emotion, and recognition of the fact that the number affected is infinitesimal. May I remind the House once again that it was as far back as 1960 that it was recommended that income tax should be introduced for farmers of a rateable valuation of £100. That was when incomes were a great deal less than they are now. Notwithstanding that they now find it took 14 years before we had a Government with the courage to make the decision which any reasonably responsible society pursuing equity would long since have taken.

Mr. J. Gibbons

I am grateful to the Minister for his homily to the farmers of this country about how generous and kind the Government are being about the introduction of a totally new form of second taxation on farmers of £100 valuation and upwards. I should like to say first of all that the very fact that the introduction of an income tax code is related in any way to a notional valuation of land deprives that system in my opinion of a right to be called an income tax at all. It should hardly be necessary to point out that there will be many farmers who will just escape the net— the £98 man, the £99 man who will find themselves possibly living in comparative comfort, with very few dependants, with very little debt, with well-equipped farms.

Under the Minister's provision pitching the incidence of tax as he does at the £100 level it will be very easy to put on another couple of pounds. For the £101 man who may have several children at school, who may have very heavy overdrafts and, in spite of this, if he does at some future time find himself with a profit not only will he have to pay the everascending spiraling rates on his £101 valuation but on anything, if there is anything left, that is taxable. The fairly prosperous person without dependants, with savings invested will be free, if this is what the Minister means, whereas the other person with the dependants who, by his own hard work and endeavour, may have made a taxable portion will come under the full force of the double belt.

The Minister will have to pardon me if I do not accept the bland assurances that he seems to make that in pitching the incidence of taxation at £100 that is a for-all-time measure. I must be pardoned if I do not accept that because everybody here knows very well in his heart that this simply is not so. This is, as Deputy Haughey said, simply the thin end of the wedge.

There may be some farmers who will be reading about this tomorrow, at least reading the version that they get in the newspapers, who will be rubbing their hands in glee and saying to themselves, "I have escaped the income tax net by a couple of pounds and the Minister did say something in the House that there was no real substance in the suspicion which was voiced by Deputies on the other side that this is merely the thin end of the wedge", and they may go on from there to reason that they will not be reached at all. They had better beware because I will guarantee that if this Government are in office this time 12 months that £100 level will be lowered because even now, with levels of unemployment rising rapidly, the economic situation is generally getting out of hand and in the time-honoured way of Coalitions they will avoid taking action until it is too late and the action they will be required to take in the end is to restrain spending by the imposition of tax and it would be my guess that the tax they will impose when that occasion comes—and it is upon us—will be the extension of the levying of income tax.

I should like to point out also to the Minister who seems to have some extraordinary ideas as to the comparative prosperity of people with valuations of this level that, unlike other large sections of the community, they have no insulation, as the others do, against the incidence of inflation; they have no wages agreement; they have no escalator clauses in their wages agreement to protect them from the uncontrolled inflation that has hit this country so severely in the last 18 months or so and that, far from being comfortable, the average and typical person upon whom this tax will be levied has taken a cut in his income as against last year of about 40 per cent, I would say. I do not think that figure is assailable. I think it is absolutely correct.

I would imagine when the thing is processed by the economists whose business it is to process it that this will be found to be the case. It must be the case with people who have cattle for 12 months and who cannot now get the price that they paid 12 months ago for them having fed them on feedingstuffs the cost of which has escalated out of all recognition during that period and during which period in order to carry on the day-to-day expenditure on their farms they have had to go deeper and deeper into debt in the banks where they are already in debt, where they entered willingly into debt in order to build up their herds. Of course, the build-up of the national herd will be seen to have stopped and to have taken a turn down before the end of the year.

If the Minister for Finance does not know, I am quite certain the Minister for Agriculture and Fisheries does know that the slaughtering of cows in the factories at the present time was never equalled since the State was established and in a couple of years' time there is going to be a scarcity of cattle in this country and the problems that we are encountering now in the European Community will have resolved themselves because Ireland, being the biggest cattle exporter of the lot within the Community, will have reduced the size of her herds and consequently also will have reduced the earnings of the country. As Deputies have been saying to the Minister for a long time during this debate, if you strike at the prosperity of the livestock industry you reduce the standard of living of everybody in the country.

I can sympathise with the Miniister for Agriculture and Fisheries whose absence from this House today is remarkable. I understand he is in Brussels. I can understand the problems that he would have, although he is not a farmer himself, in trying to persuade his colleagues, all city men or professional people, trade unionists, of the error of the Government's ways but he would be completely shouted down. The Labour Party Members of the Government would remind him of the resolution of the last Labour Party conference. Whatever Deputy Clinton might think he would be steamrolled by this uniquely urban-minded Government we have.

I imagine that the pitch in the level of the incidence of income tax on farmers at £100 valuation will be lowered very dramatically next year and, thereafter, probably taken away altogether in order to catch all the little fish in the net. It is of very little use to the Minister to introduce any form of taxation on farmers during the current year. Except farmers are able to prove that the losses that they are sustaining they would be levied on the other basis for which there is no reasonable foundation, the 40 times the rateable valuation.

Since it is a fact that the greater part of the farmers of the country do not keep any accounts of a kind that would be acceptable to the Revenue Commissioners this other form of assessment would be used. We will have farmers paying income tax in the coming year although they would have made serious losses and their overdraft would have shot up. They will not be able to prove it to the satisfaction of the Revenue Commissioners in the absence of books kept in a way acceptable to them.

As Deputy Sheridan pointed out earlier I would be afraid of very serious agrarian trouble when the agents of the Minister and the Revenue Commissioners come with or without their battering rams to collect this tax. It has never been my opinion, and I said this publicly when my Party were in Government, that farmers have a right to escape just taxation. They have not got any such right. I said that before when I was a Member of the Government and I say it again lest it be represented that Fianna Fáil are playing politics with this. Fianna Fáil are not playing politics. This taxation will affect me personally but that is not material to this discussion. Like most of my fellow farmers I feel that once it is established that the tax is fair and just no person, even if he wants to complain, has a right to complain and ought not to complain. Why should he complain when people with very small wages are bearing their share?

What we are protesting about is the incredible duplicity of the Minister for Finance in blandly ignoring the protestations of the farmers' organisations who say they will pay income tax but ask the Government to derate their land, to top taxing the means of their production. Land is the plant with which farmers work and the organisations say that if the taxation is removed from that thereafter, if there is a profit, a just share of taxation will be paid upon the income assessed. In my view that is a very fair offer. Further taxation above and beyond that is patently unjust. The reason the Minister for Finance is reluctant to take it away is obvious because he has not the ability, the wish, or the comprehension of the rural situation to dismantle the obsolete and ridiculous method of local taxation that we have at present and introduce a more equitable system in its place.

The rating system of local taxation that has been in operation here is getting more unsuitable and inappropriate for modern times. Since the Minister is so fond of the recommendations of the scholarly gentlemen who examine our problems from time to time perhaps he will have regard to the recommendations made in this connection several years ago. He should take his courage in his hands and reorganise local government financing because it is so patently unjust and its injustice increases so rapidly year after year as the rates go out of control that some day somebody will have to tackle it. The likelihood is that a Fianna Fáil Government will tackle it. We have experience in the past that Coalition Governments, by their very structure, by their very nature, have not got the unity of purpose to do anything worthwhile. We had an example of it last week in this House, an unparalleled example by the Leader of the Government slinking into the Division Lobbies, having safely seen his little herd over to the Níl side, slinking into the Tá side. That is the type of performance one gets from Coalition Governments and I do not think the Coalition Government would revise this unjust system of local taxation that we have.

As far as I know no farmer on the Government side has spoken in this debate as yet. That is a very significant factor. I should like to warn farmers that as sure as there is a Bill on a duck that £100 level will be blown out the window in next year's Finance Bill.

Minister for Defence (Mr. Donegan)

It was with some interest that I listened to Deputy Gibbons insisting what would be done with the £100 level. He does not know, and that is the truth.

Mr. J. Gibbons

It will be lowered.

Mr. Donegan

How can Deputy Gibbons say that? He was a Minister for many years and he knows perfectly well that he could not sit on those benches and say that.

Mr. G. Collins

Does the Minister know anything more about this than he knew about the wealth tax?

Mr. Donegan

I should like to point out that everybody, in Deputy Gibbons' book, who has a valuation of £101 is poor, has an enormous number of commitments and dependants, and everyone with a valuation of £99 has no commitments at all, is very comfortable and doing very well. Deputy Gibbons cannot have it both ways.

Mr. J. Gibbons

Neither can the Minister for Finance.

Mr. Donegan

The Deputy is trying to have it both ways. The position is that either the taxation will bear heavily on people or it will not. As far as I am concerned nobody likes putting on new taxation. Every Government who have had to do this did not like doing it.

Mr. Haughey

Why does not the Minister for Defence do a wealth tax job on this?

Mr. G. Collins

The Minister for Defence should make a name for himself and do a wealth tax job on this.

Mr. Donegan

I can assure Deputy Gibbons that I have never heard so politically false a speech in my life.

Mr. J. Gibbons

The Minister for Defence should have been here this morning to hear his own Minister for Finance.

Mr. Donegan

The Deputy was here and all he wanted to do was paint a picture that was going to frighten farmers. One of the things which Deputy Gibbons could do, having been Minister for Agriculture and Fisheries, and knowing what his duty would be, would be to try to give farmers more belief in the future of their industry. Everybody knows that prices have gone wrong in the last nine months and that, therefore, what a politician should do is to try to encourage farmers to believe what is right. Prices have gone wrong because of the Common Market situation but——

Mr. G. Collins

Because of decontrol of feeding prices and the Minister for Defence knows that well.

Mr. Donegan

I could deliver a lecture on feeding prices.

Mr. McSharry

I am sure the Minister could, and a very profitable one.

Mr. Donegan

Feeding prices went down.

Acting Chairman (Mr. Carter)

Just a moment, please. The Chair would prefer that Deputies would allow the Member in possession to make his contribution without interruption. I would appeal to Members to refrain from interruption.

Mr. Haughey

On a point of order, is it usual when one Minister is handling an important piece of legislation for another Minister to come in and contribute to the debate?

Mr. Donegan

I have seen it done many times.

Acting Chairman

This is an amendment to a section and every Member is entitled to make a contribution.

Mr. G. Collins

We are not on an amendment; we are on a section.

Mr. Haughey

Is the Minister for Finance not able to deal with this himself? I suggest Deputy Donegan is only causing confusion.

Mr. Donegan

I am obeying the Chair.

Mr. Esmonde

Free speech.

Acting Chairman

Just a moment. I came in late in this debate and I want to clear up this point. We are on section 15 and I would ask Deputies to stay on section 15.

Mr. Blaney

I suggested when the late sitting motion was moved tonight that this should be left over until tomorrow morning when we could deal with the matter in a sane manner rather than proceeding as we are at the moment.

Acting Chairman

That is not a matter for the Chair.

Mr. Donegan

When I was interrupted I was making the point that Deputy J. Gibbons had constantly adverted to the fact that the farmers were doing badly. They are doing badly because of prices in the Common Market and there is nothing anyone can do about it. One of the things a good politician with the wellbeing of the farmers at heart could do would be to try to instil some confidence into the farmers. Instead of getting up here and saying things are going very badly and prices are going down, he should point to the good things and engender hope that cattle prices will recover and try to lead the farmers into a situation in which they will endeavour to increase their stocks. Deputy J. Gibbons deliberately suggested their stocks would be decreased in years to come and he said that he was absolutely certain there would be a scarcity of cattle in about two years' time and almost gleefully suggested that large numbers of breeding cattle were being slaughtered for meat in the factories. These are not responsible statements. They are related to the possible future fortunes of a political party and they will certainly not help towards improving the farmers' lot.

Mr. Andrews

They are statements of fact.

Deputy Blaney and Deputy McDonald rose.

Acting Chairman

Deputy McDonald.

Mr. Blaney

Are speakers not being called in rotation?

Acting Chairman

I am calling Deputy McDonald. I called him too quickly but we can adjust that situation. Speakers will rotate.

Mr. McDonald

I have only a short contribution to make. I listened to some of the speeches of some of my colleagues across the floor and I do not think it is altogether fair to allow the suggestion to go abroad that farmers are all exceptionally poor because of the decline in cattle prices and that there is poverty raging all over the country. Figures do not bear that out. I see nothing wrong with farmers being assessed for tax because nobody will be able to collect tax if farmers do not make a profit. We should bear that in mind. I should like to see an end to the rating system but, until that change comes about, there is nothing wrong in assessing farmers for tax purposes. I know that the vast majority of them will not be called on to pay tax because they have not got the money, even when one takes into consideration the family farm income.

I should like to remind the House now of the increase in cattle in the first six months of this year. At the end of June we exported on the hoof 91,843 more prime cattle compared with the corresponding period last year. The intervention price has also helped this year. Exports of live sheep are up by 20,146.

Mr. MacSharry

How many live cattle were exported in the same period?

Mr. McDonald

The number of live cattle exported to Britain in the first six months of this year were 112,138 compared with——

Mr. MacSharry

We want the totals compared to last year.

Mr. McDonald

There were 134,879 live cattle exported.

Mr. MacSharry

How many the year before?

Mr. McDonald

149,000 the previous year.

Mr. MacSharry

Could the Deputy not give us the right figures all the time? Cut out the nonsense now. There are 500,000 extra cattle on the land that cannot be sold.

Mr. McDonald

The number of cattle exported on the hoof—I do not know whether they would come from Deputy MacSharry's constituency—is 91,843 more than in the corresponding period last year and, as Deputy MacSharry pointed out, the cold stores are full. One of the difficulties with cattle at the moment is as a result of the last Government not having the foresight to provide the country with cold stores. Not only did they not provide cold storage but they did not provide transport. Of all the carcases exported only 17 per cent was carried in Irish registered lorries or Irish containers.

CIE have three juggernauts in the container trade. There was not foresight to plan for the expansion in agriculture or any other part of the economy. There is no use crying about the situation when the last Government had not foresight. It is all right to have a go at the Minister for Finance. He has been in charge for only 18 months. The Opposition were almost as many years in office and did little about forward planning.

Mr. Allen

Oliver has you in his back-pocket.

Mr. McDonald

Is that another rural Opposition Deputy I hear over there?

Mr. McSharry

Another letter is being drafted and it is not in a foreign language.

Mr. McDonald

The Minister has sympathetically considered all the representations made to him. This section will not be looked upon as inflicting any hardship on the farming community. The vast majority of fair-minded farmers accept that they should be assessed for income tax purposes.

Mr. Blaney

I am glad to have the benefit of Deputy McDonald's contribution, after the news from Deputy Donegan. If I were to believe both Deputies—which I do not, but others outside may—the Minister for Defence's criticism of those who have spoken against the imposition of this tax on farmers at this time and his telling of the plight of the farmers would be what I would believe. Those who criticise the plight of the farmers are doing a disservice to the farming community. The Minister for Defence's formula is that we should be encouraging the farmers because of the good times that are coming. We should help them to build up their stocks. I mean no personal offence but Deputy Donegan knows, because he is in that provender milling business, that it may be difficult to feed the animals that are there without taking on additional cattle.

I am realistic enough to realise that there is over-stocking at the moment. There will be danger in the Autumn that the feed position will be at an extremely dangerous level. The losses incurred may not be only in the valuation of the stock carried through the winter but as a result also of the lack of sufficient feed there may be high mortality rates. There is no point in blinding ourselves to this fact. That would not do any service to the farming community. We must not fool them into believing that they can hold what they have now and perhaps even more. The whole problem is how to feed the animals when the winter comes. We would be wrong to be preaching any other gospel at the moment. There are increased numbers after the efforts of several Governments and Ministers over many years in anticipation of that which has now fallen apart, namely, the Common Market.

There is a shortfall of 10 per cent but certain Member countries are importing meat. The Ministers for Defence and Finance should see what the Ministers for Agriculture and Fisheries and Foreign Affairs should do about this matter instead of talking of providing additional cold storage. It is chilly enough at the moment without talking about more chilling. We have not enough trucks to transport the beef because of bad handling by the Government in the matter of taxation of trucks in this country as against what happens in the countries with which we have to compete. Perhaps Deputy McDonald may be able to do something abroad to redress the situation.

Mr. McDonald

I am fully aware of the situation.

Mr. Blaney

Perhaps the Deputy does not realise that we have not enough trucks.

Mr. McDonald

We have 17 per cent of what we are using.

Mr. Blaney

We are trying to keep them on the road. Others are buying trucks cheaper and running them cheaper. Their taxation and insurance are lower.

Mr. MacSharry

They are getting back-loads as well.

Mr. Blaney

It has to be done behind backs.

Mr. R. Ryan

I hope the Deputy is not overlooking the fact that in the 1973 budget I reduced road tax on these vehicles down to the EEC level.

Mr. G. Collins

It cost £4,000 for a truck.

(Interruptions.)

Mr. Blaney

If the Minister were realistic in this matter he would reduce the tax to zero. We are paying higher costs than others for the trucks. These huge juggernauts are a very heavy burden as regards cost. With high interest rates I would ask Deputy McDonald what about the trucks and cold storage. To those who talk about holding on to cattle and building up stocks over a number of years I would say that unless the Minister for Social Welfare introduced some scheme to pension off some of the animals I do not know what we will be doing two years from now. We are not being realistic. The sooner we get down to the reality of the situation the better. We have a cattle population which we will not be able to carry over healthily through the winter that lies ahead. The Minister's way of encouraging farmers is to tax them. Could there be anything more contradictory than encouraging them to keep cattle and then taxing them on their profits? A Government Deputy says that there is nothing wrong in having a tax structure for farmers, because if they do not make a profit they will not have to pay tax. That is daft.

Mr. McDonald

That is what Deputy Blaney is saying.

Mr. Blaney

The Deputy knows that as well as I do. Why provide a structure if no taxes will accrue because of losses?

Mr. G. Collins

Why bother keeping us here?

(Interruptions.)

Mr. Blaney

Export figures for cattle were quoted. Any beast which was exported alive or dead went out of this country owing money to the man who sold it.

Mr. McDonald

Absolute nonsense.

Mr. Blaney

If the Deputy asks the boys in the business he will find out. I would be amazed if the Deputy does not know that what I say is true. We should not blind ourselves to this situation. My reason for speaking on the section was to point out that to encourage farmers to keep more cattle and to build up their hopes by giving them a false sense of security is not only dishonest but is doing a grave disservice to the farming community.

There has been much talk about the time of free beef. According to reports, the commissioners in Brussels are thinking along these lines now. They are wise after the event. The fact remains that there is not one four-legged animal which does not owe its owner money. Any question of adding up figures and saying that so many more cattle were exported in the first six months of this year as compared with the same period last year is merely adding to the debt created by the collapse of prices in the market. No amount of talking can hide these facts. Nobody should try to cod the farmers to the degree which has been attempted by the last two speakers.

Mr. MacSharry

Earlier in the Debate the Minister said that 77 per cent of farmers do not pay rates. I assume he means 77 per cent of the farmers with valuations of under £20. The total number of farmers in the country was, he said, 600,625. If these figures are correct this means that approximately 155,000 farmers do not pay rates, leaving 45,000 other farmers 16,000 of whom he wants to bring into the tax net immediately. While he talks about 16,000 out of 600,625, in actual fact in so far as the agricultural economy of the farmers contributing to it are concerned, on a valuation basis he is really taxing 16,000 out of 45,000. I should like to know if what the Minister said earlier is correct, and if not, if he could explain it further.

Mr. R. Ryan

I would not dispute the Deputy's figures. The reality still remains. Rates as a percentage of farming represents 3.8 per cent. Rates as a percentage of non-agricultural income represents 5 per cent.

Mr. MacSharry

That is different. The Minister was talking about 77 per cent of farmers who do not pay rates.

Mr. R. Ryan

I said that 77 per cent of the farm holdings in this country are not liable for rates.

Mr. MacSharry

Does that mean that they are under £25 valuation?

Mr. R. Ryan

Yes. They are exempt and those holding up to a valuation of £33 are partially exempt, but there is relief for all farm holdings. This relief is not given to other people. Deputy Gibbons spoke about the desirability of getting rid of rates as a system of taxation. I recall to the Deputies opposite that their own Government produced a White Paper on Local Finance and Taxation in which they came to the conclusion that there was no alternative to the system of rates. Yet today they are arguing that we should produce an alternative which they, after long deliberations, were incapable of framing.

Mr. Colley

The Minister should quote all the relevant parts of the White Paper.

Mr. G. Collins

The Minister knows what his colleagues from the Department of Defence thinks about White Papers.

(Interruptions.)

Mr. R. Ryan

The Fianna Fáil Government came to the conclusion that local rates were irreplaceable. Nobody has suggested that rates should be abolished on commercial property. Then the argument that rates should be abolished on agricultural land only but not abolished on other means of earning a livelihood——

Mr. Colley

We will come to that on another amendment.

Mr. R. Ryan

They cannot be separated. If people are to be treated equally, which is our objective under the tax law, favourable treatment should not be given to one section.

Mr. G. Collins

Such as the bloodstock industry.

Mr. R. Ryan

By so doing, one imposes an additional obligation on others. That is the reality of what is being proposed. There is a lesser burden on the farming community than there used to be. Fourteen or 15 years ago the farming community carried out a higher load of rates than the commercial and industrial sectors but the situation has changed very remarkably over the years so that now they are in a much more favourable position.

On top of that the relief which the Government is giving by way of transferring the local rates to the central exchequer—the housing and health subsidies—will provide greater material benefit to those who are at present liable for most rates. Therefore, even if there is validity in the argument that the larger farmer pays more tax, he is the person who will get the greatest relief by virtue of the transfer of housing and health subsidies, a transfer which I would point out will cost—by the time it is implemented in two years time—£75 million. Therefore, already they have an advantage which is not shared by the industrial and commercial community. On top of that, they will reap further advantage in the years immediately ahead.

Mr. MacSharry

That benefit will be gone in another year.

Mr. R. Ryan

The benefit is none the less there. If it were not there then the local rates would carry £75 million extra. I do not regard as gone relief which is given to the local rates of £75 million. The rate is a continuing and permanent relief; it is not something that has evaporated. Had we not made the transfer, then it would be £75 million greater.

Mr. MacSharry

It is down the drain now; £75 million have gone now.

Mr. R. Ryan

Does the Deputy want us to put it back?

Mr. Crinion

I should like to take the Minister up on the point in saying that there was only 3.7 per cent of the income from farmers——

Mr. R. Ryan

3.2 per cent.

Mr. Crinion

3.2 per cent that they paid in rates, because the figures I have——

Mr. R. Ryan

I am sorry; it is 3.8 per cent.

Deputies (Fianna Fáil)

The Minister should resign.

Mr. MacSharry

That is not the first mistake.

Mr. Crinion

The Minister did not mention the fact that if a farm contained 70 acres it was 5.4 per cent; that if it contained 133 acres it was 8 per cent and, if it was 332 acres, it was 13 per cent of his gross income and, if the farm was larger still, the percentage would be higher. Therefore, the people the Minister is going to tax are paying a much higher portion of their income in rates than does the industrialist at 5.7 per cent. The services and facilities provided to the industrialist for his 5.7 per cent are much more than that which the farmer receives for his 8 per cent, 13 per cent or 15 per cent. It makes a sad story because the industrialist and business person will have all of the services, benefits, roads and so on. Also, if he is an exporter he will enjoy tax-free profits on his exports. The farmer is being provided with none of those facilities or services. He is not being given any facilities for his exports; he has not got tax-free profits on his exports; he has not any of the services of the townspeople; it was in recent years only that he had electricity installed and indeed has to pay a special service charge for that. Also when one considers the roads they are of a much lower quality than those with which the industrialist will be provided, and the industrialist usually can crack the whip with his 5.7 per cent and get extra services. Also, there is no piped water supply in the country; the farmer has to instal it out of his hard-earned income. Therefore, it is completely unfair to quote those figures. It was always an accepted policy over the years that the rates the farmers paid represented their income tax. Now they are being asked to pay rates and income tax, that is, if they have anything left with which to pay. The Minister had the audacity of being quoted in public saying that he did not understand what they were talking about.

Mr. J. Gibbons

They were peasants; he did not understand them.

Mr. R. Ryan

Who allegedly quoted me?

Mr. Crinion

The Minister was quoted in the papers as saying that when the farming organisation went in to see him on Monday he did not know what they were talking about.

Mr. R. Ryan

That just shows you that I have a sense of humour.

Mr. Crinion

It is a nice sense of humour the Minister has when he is taking tax from the farmers as well as rates. It shows how much sympathy a Dublin-based government has, how much they understand the rural community in this country and the farmers of Ireland who helped to put them in government. It shows what they really think of their supporters by saying it was a sense of humour. I hope the Minister is quoted saying what he said on Monday as a sense of humour.

Mr. J. Gibbons

Mr. McGonagle will have that taken out of the papers: it is all right.

Mr. MacSharry

Who is McGonagle?

Mr. J. Gibbons

He is the big chief.

An Ceann Comhairle

I do not think reference should be made to persons outside this House in that fashion, Deputy Gibbons.

Mr. J. Gibbons

I was talking to my colleagues.

An Ceann Comhairle

The Deputy made a public statement.

Mr. Haughey

He is only physically outside this House; spiritually he runs this House.

An Ceann Comhairle

He is in the category of a civil servant and we do not reflect upon civil servants in this House. It is a convention that we do not——

Mr. G. Collins

In his present role.

An Ceann Comhairle

Let there be no further reference to the gentleman concerned.

Mr. Crinion

Farmers are prepared to pay their fair share of income tax and, as I said before, the rates they pay have always been regarded as the farmers' income tax. People with valuations of over £100 are paying much higher rates than the industrialist with the large factory and all the facilities. I would say the farmer is paying twice the rate on a percentage basis on his gross income. Even though it is a Dublin-based Government, they must remember that it was the country people who put them where they are, to a large extent, with false promises of revision of taxation.

Mr. G. Collins

They are there more by default.

Mr. Crinion

Oh, I know that.

Mr. G. Collins

All of them.

Mr. J. Gibbons

Deputy Henry Kenny is from the West.

Mr. G. Collins

We have no Ministers from the West.

Mr. Crinion

All they could do was appoint a Parliamentary Secretary. Of course, Dublin people were always fairly selfish in their ways and the Government are in the same category.

Mr. J. Gibbons

They are better class people, you must admit—more cultured.

Mr. Crinion

Because farmers are paying a higher percentage of tax on their gross incomes would the Minister consider having the rates they have been paying deducted from their assessment of income tax?

An Ceann Comhairle

That section 15 stand part of the Bill?

Mr. Haughey

One final question —in the nature of the operation of section 15 and Case I of Schedule D, profits or gains from farming will now be taxed. I understand that there is a particularly iniquitous monstrous form that is used by the Revenue Commissioners in regard to farming profits. It is called, I think, Form 80 something. Even if the farmer keeps proper farm accounts he is still required to complete this monstrous document. I am sure the Minister knows exactly the form to which I am referring. Could I avail myself of this opportunity to appeal to the Minister to get rid of this form completely or, certainly in a case where farmers or accountants submit for them proper farm accounts, they will not be required to fill up this document.

Mr. R. Ryan

The form to which Deputy Haughey refers is certainly a comprehensive one. My impression has been that farmers found it to be a very useful guide in completing——

(Interruptions.)

An Ceann Comhairle

The Minister has been asked a question; let us hear his reply.

(Interruptions.)

An Ceann Comhairle

Order. The Minister was asked a question and he should be allowed to give his answer.

Mr. R. Ryan

I thought the Opposition were supposed to be making well considered comments. The farmers found it a useful guide because it sets out in detail various matters that are pertinent, including the allowances to which they would be entitled which might not readily occur to them. This is a matter about which we can have further useful discussions. I know that some farmers received the forms and considered they were far more comprehensive and understanding of their problems than they thought the Revenue Commissioners ever could be. On many occasions I have been critical of revenue and tax forms and I will give this matter my personal attention as well as considering the wise comments we may get from the representative farming organisations.

Question put and agreed to.

SECTION 16.

An Ceann Comhairle

As amendments Nos. 8 and 9 are cognate they may be taken together.

Mr. Haughey

I move amendment No. 8.

In subsection (1) (a), page 8, lines 47 and 48, after “profession” to add “assessable under Case II of Schedule D”.

I regard section 16 as disasterous in its implications and in its likely repercussions. Undoubtedly it will cause many problems in its administration and it will have serious implication for the development of farming generally. Certainly it will have inimical consequences from the point of view of the prosperity of the rural community as a whole. If we had time to do our duty as we should on this Bill, either we should abolish section 16 entirely or fundamentally alter it.

I do not think it would be a fruitful exercise for us on these benches to endeavour to have section 16 completely eradicated from the Bill. If Deputies who have a knowledge of the rural community studies this matter carefully and if they were free to act as they would wish, undoubtedly they would support a move to take the section out of the Bill completely. Even a superficial consideration enables one to recognise the many difficulties and hardships that will arise because of the operation of section 16.

The section was put forward for very limited reasons but in its operation it will have a much more comprehensive effect than was suspected when originally drafted. I warn the Minister that it will cause endless trouble, apart from the serious hardships and injustices involved. I have put forward the amendments in an endeavour to make a very minor improvement in the section. It is obvious from the wording of the amendments what I am endeavouring to do.

Broadly speaking, section 16 sets out deliberately to breach the concession in regard to the £100 valuation limit contained in section 15. Section 15 states that in the case of a farmer whose valuation does not exceed £100 he will not come within the ambit of Chapter II and the scope of the income tax code. Section 16 immediately proceeds to weaken that section. In effect it says that if a farmer or his wife is engaging in any business other than farming the limit of £100 does not apply and these people will be brought into the income tax net unless the valuation is less than £50. The effect of section 16 will be that in the case of a farmer whose valuation is between £50 and £100, if he or his wife are engaged in any other business they will be liable for income tax not only on their other business but also on their entire farming profits. As Deputy O'Malley pointed out on the Second Stage, immediately the £100 limit is breached.

I wish to direct the attention of the House to the wording of section 16 (1) (a) and (b). Deputies will see that the subsections are worded to ensure that if a farmer or his wife, either solely or in partnership with someone else, carry on a trade or profession they will be brought within the net even though the valuation is between £50 and £100. I have sought to insert in both paragraphs after the word "profession" the words "assessable under Case II of Schedule D". It is important to make that distinction.

If the Minister wishes to go ahead with this iniquitous proposal he should confine the provisions of section 16 to cases where people are actually carrying on a business outside their farming activities. As the section is framed at the moment, it seems it will have the effect of including people who have valuations in the £50 or £100 category, even if they are employed in a profession outside farming. In this instance a profession would cover a nurse, teacher, doctor, a veterinary surgeon or a host of other vocations.

I want to make it clear that in this section we are not dealing with the provision whereby the tax allowances of a person who has off-farm income are reduced. That comes later in the Bill. In this section we are dealing with the case of a farmer and his wife who have any other business outside farming and, because of that, their farm profits will be taxed in full. The exemption which applies to other farmers of between £50 and £100 valuation will be denied to them. That is the situation and in that situation I think the appropriate test to apply from the Minister's point of view—and I do not, even though I am arguing his case, want it to be thought that I am going along with the Minister's thinking in this regard—but even from his point of view these provisions should be restricted to cases where a farmer and his wife are actually carrying on a business in the professional sense and not, perhaps, exercising that profession as a salaried employer or a part-time employee. That is the effect of my amendment—to make it clear that these provisions would only come into operation if the profession is being practised perhaps, really in a selfemployment capacity.

But if a farmer's wife or the farmer himself happens to have a profession and earns some income from it, the very fact of earning that income would not operate to make them liable for tax on their farm income in this £50-£100 bracket. It seems to me that apart from anything else, as the section is framed at present it would give rise to this anomaly: if one farmer in the £50-£100 bracket had a wife who was a nurse—I take a nurse because it would be regarded as a profession—who practised her profession and earns some income from it— indeed, as the section is framed she would not have to earn a great deal of income from the practice of her profession; I think the section could operate even if she earned no income so long as she practised the profession—however, you would have the case of one farmer whose wife had a profession, a nurse or teacher or something like that and the fact that she practised that profession would make him liable while another farmer whose wife had a job which was not a profession in the accepted sense— for instance as secretary of a local business, a creamery or a factory— that farmer would not be brought into the tax net because his wife had an income from a job which could not be described as a profession and would not therefore come within the general terms of the Bill.

Nothing we could do by way of amendment to section 16, unless it were pretty radical and fundamental, would make it acceptable to me but if we must have a section 16 the amendments which I am putting forward and urging the House to accept would, perhaps, do something to ameliorate the absurd situation the section creates and would have the effect of avoiding the type of anomaly I have described.

Mr. R. Ryan

As I explained on the Second Stage of the Bill this section is, to a large extent, an anti-avoidance measure to bring to an end some of the most appalling scandals which have arisen by reason of the fact that farming profits were exempt from tax and some people engaged in other businesses or professions set off profit from their trades or professions against farming profits in order to avoid paying a fair share of tax. I instanced cases like a veterinary surgeon who claimed to be earning less than £1,500 in his veterinary practice——

Mr. Haughey

On a point of order, may I ask the Chair to adhere to his own ruling in this matter? It seems to me that the Minister is embarking on a discussion of section 16 as such. If he does that I shall do likewise but perhaps he would confine himself, according to the rules of the House, to my amendment.

Mr. R. Ryan

With respect, I am on the amendments and if I am extended the courtesy which I have extended to others of being allowed to proceed without interruption I shall show the Deputy how relevant my remarks are. I instanced a case of a veterinary surgeon who claims to be earning less than £1,500 from his profession—he must be a very rare specimen—and who claims to be earning something in the region of £45,000 from his farm.

Mr. Haughey

But he would be assessable under Schedule D. That is the whole point of my amendment.

Mr. R. Ryan

Yes, but wait. There is the case of a dentist who claims to be earning from his profession something around the £4,000 mark and twice that amount from his farming profits. Or take a doctor who claims to be earning from his trade or profession—medical practice— £2,500 and in excess of £10,000 from his——

Mr. Haughey

Those would also be assessed under Schedule D.

Mr. R. Ryan

——farming profits. Those are cases which shows the absolute necessity to bring shameful practices like that to an end. Why should such people who are making enormous profits from their trade or profession use a device to set these profits off against farming profits and thereby escape proper tax liability on their true income? Deputy Haughey is interpreting the word "professional" in a non-tax way. He is regarding any person who obtains a professional qualification as a person who would be caught by this section. That is not so. If he is an accountant, a solicitor or doctor who happens to be the employee of another, that person will pay tax under Schedule E and not Schedule D. A trade or profession for tax purposes refers to a sole trader, to a person who is self-employed, to a person selling his or her skills directly and that is the profession and there is no need to add the words "assessable under Case II of Schedule D". First, it is unnecessary to use the words that Deputy Haughey proposes.

Mr. Haughey

The Minister has not proved it is unnecessary.

Mr. R. Ryan

Further, there is a very good reason why we should not do it because there is at least one profession, which occurs to me, which is not assessable under Case II of Schedule D because it is an exempt profession and that is the profession or activity of writer, author or artist. Such a person is exempt under Case II of Schedule D. If an author's earnings from his profession are exempt from tax he could then get exemption also in respect of his farming profits. It would not seem to me that would be correct. Many people envy authors and artists the exemption they enjoy and Ministers for Finance are under considerable pressure to remove this exemption which is a cause of annoyance to people who do not enjoy it.

Mr. Haughey

Do not dare.

Mr. R. Ryan

I consider that it would be very wrong indeed if in addition those people who were enjoying the exemption, were by reason of that exemption also to get exemptions in respect of their profits from farming, as suggested by Deputy Haughey's amendment. They would be benefits not available to other members of the community.

We will have to consider this matter in the light of the manner in which I have approached it and not risk any further loopholes than are absolutely necessary. What we are trying to do is to close loopholes and to ensure that the proper tax is paid by people who are lucky enough to have a professional skill or a business outside their farm interests. Many of the people who have businesses outside farming have inherited them and it would be totally wrong that such people should enjoy exemptions from two sources of incomes. We want to close that loophole.

Mr. Haughey

I am afraid the Minister has not attempted to answer my argument. He has gone off into another irrelevant side issue. In order to bring him precisely to my amendment I ask him is it his intention—I think it is—that these provisions will only operate where a person carries on a profession in a business sense; in other words, if a person is employed at a profession for a salary, he will not come within the ambit of these two paragraphs——

Mr. R. Ryan

In respect of their farming profits, of course such people will not pay income tax on their wages or salaries.

Mr. Haughey

But is it not the Minister's intention that if a person is simply employed in an office or profession that such employment will limit the £100 valuation? That is what I have thought the Minister's intention to be and therefore I submit he must accept my additional words or some similar words. If the Minister's only objection to inserting the words I am suggesting is that they would bring in writers who are brought in by virtue of the 1969 Act, then a simple proviso to exclude people in the arts profession would meet the case, and it is perfectly simple for the Minister to insert the words I have suggested and perhaps to add others. Then he would get over the difficulty in relation to writers, artists and so on. That would dispose of the Minister's argument in that respect which leaves us solely with his suggestion that my words are not necessary.

Even on his own statement, they are necessary because he does not intend that people who are exercising their professions in employment should be involved in this. Therefore, the Minister wishes these two paragraphs to apply exclusively to people who are practising their professions in a self-employed way as businesses and who are earning profits or gains in that respect. In order to make a distinction, he must insert my words or append some similar form of words.

Mr. R. Ryan

If there was validity in Deputy Haughey's remarks, then such words would long since have been used in tax laws. The words in this section have very significant meanings: there is no room for any doubt about them. The fact that the person is a professional does not mean that the person automatically comes under Case 2, Schedule D. People come under that only if they are operating on their own. If they are employees, they come under Schedule E.

Mr. Haughey

I ask the Minister a simple question. Is it his contention that if a farmer's wife, who is a nurse is employed at a local hospital in pursuance of her profession, and her earnings are taxed under PAYE, that that will not operate to bring the farmer within the provisions of section 16 (1), thereby making him liable for income tax?

Mr. R. Ryan

If she is paying tax through PAYE this would not apply to herself or her husband, but if she is operating on a fee basis, it would.

Mr. Haughey

That is precisely the problem I am getting at. If the Minister says that is the position, of course I accept it, but it seems to me that for proper drafting or, may I say, proper legislating, he should have spelled out here that it is only people who are fee-paid and are assessable under Schedule D who are involved. Therefore, I do not see why the Minister cannot add the words I have suggested, or a similar form of words.

Mr. J. Gibbons

I am thinking particularly of farmers and particularly of farmers' wives who run such businesses as what has become known as "Farmhouse Holidays". What is the position there?

Mr. R. Ryan

I have an amendment in this respect, if the Deputy would like to wait for it.

Mr. J. Gibbons

I should like to ask the Minister if this would apply equally to farmers—there are many of this kind—who have trades like carpentry and so on. They might use such occupations as adjuncts to their farming operations. The scale of such operations varies a great deal and I should like to know what the position would be in relation to a farmer-builder or a farmer-carpenter. I am referring to people who would take work as they got it. Will such a person be assessed first on his earnings as a carpenter and thereafter as a farmer with a valuation between £50 and £100? There is another class of person I want to ask the Minister about. Throughout the country there are a great many village or crossroads shops which sell bread, butter, tea and so forth. The profitability of that type of business cannot be large but frequently it occupies most of the time of the woman. What will the position of people like that be? There are also people like sub-postmasters who have farming interests. The office might be run by the wife of a farmer who would have a valuation of between £50 and £100.

Progress reported; Committee to sit again.

Business suspended at 12 midnight and resumed at 12.30 a.m. on Thursday July 25th.

An Ceann Comhairle

We resume on section 16 of the Bill. Amendment No. 8 in the name of Deputy Haughey.

Mr. R. Ryan

I do not know if Deputy Haughey is withdrawing his amendments. I have now been posed a question which is best answered by my dealing with my amendment which now follows, although it is not relevant to the particular amendments of Deputy Haughey.

Mr. Haughey

I want my amendments put.

Mr. J. Gibbons

Have we finished discussion on this amendment?

An Ceann Comhairle

The Deputy is asking that the question be put.

Mr. J. Gibbons

I had been asking before the adjournment——

An Ceann Comhairle

The question the Deputy is raising would be more relevant to the Minister's amendment, which will be coming up shortly. I would be grateful if the Deputy would reserve his remarks until then. It would be more appropriate.

Amendment put and declared lost.

Amendment No. 9 not moved.

Mr. R. Ryan

I move amendment No. 9a:

9a. In page 9, line 20, to delete "£50" and to substitute "£50, or if it did so exceed £50, that any trade carried on by his spouse consisted solely of the provision of such accommodation being ancillary to the farming of that farm land."

The purpose of this amendment is to ensure that where accommodation which is called farm guesthouse accommodation is offered, income arising from that activity would not disqualify the farm in question, even if the valuation of the farm in question exceeded £50, from being exempt from taxation. I am sure Members will recall that in the course of my comments on the Second Stage of the Bill I said I thought this was an activity which should be encouraged, and, because it was so directly and immediately related to the farm, unless it is a farm that cannot be a farm house and therefore cannot have farmhouse accommodation, I felt that it would be appropriate that this should not be deemed to be a trade or occupation or profession separate from the farming activity.

On that account I offer this amendment which will ensure that such cases—I think Deputy Gibbons shares my views on this—would not disqualify the farmer from the exemption which he can continue to enjoy on his farming activities, even though his wife may for some parts of the year take in guests under the farmhouse holiday scheme.

Mr. Colley

I am glad that the Minister has accepted the proposal which I and other Deputies on this side of the House made on the Second Stage discussion, that farmhouse holidays should not be adversely affected by the proposals in this Bill. We were very concerned at this, and I am glad that the Minister has now found it possible to devise an amendment which apparently will secure this position. I think this is a step in the right direction.

It is all that the Minister can do in relation to this section, but I wonder whether a similar situation can arise on another section, that is, section 28 relating to the halving of this allowance, and whether the Minister has given thought to the effect, in the farmhouse holidays case, of section 28. I am mentioning that now. It may be inappropriate but since we are dealing with the farmhouse holiday scheme, perhaps the Minister could indicate, when replying, what he thinks of that situation. Furthermore, I would hope that, as indicated earlier, the Minister would on this amendment enlighten us in regard to the queries raised by Deputy Gibbons before we adjourned. Deputy Gibbons raised matters of considerable practical importance in rural Ireland and the answers to the questions he raised will be of considerable interest to all of us and to all of those who sent Deputies here from various parts of rural Ireland. We look forward to the Minister spelling out the precise position of the various categories mentioned by Deputy Gibbons to see what is the position and, if necessary, what can be done about the position arising in regard to those people.

Mr. R. Ryan

I should like to deal with the first point that Deputy Colley made. The situation of the £20 valuation in the case under section 28 and this one is not the same because there is no question of bringing in the farming profits of a person with £20 valuation or less for tax purposes. What I am doing here is ensuring that farming profits are not to be brought in for tax purposes merely because the lady of the house has taken in farm guests. There is no question of taxing the farm income in that case.

Mr. Colley

Yes, but there is a question of halving the allowances where the wife is earning in any capacity. I think that would be a correct version of it, would it not?

Mr. R. Ryan

When you get down to the small cases——

Mr. Colley

We will raise it on section 28.

Mr. Haughey

First of all, the fact that the Minister has had to put down an amendment in this way underlines more clearly than anything else could the sort of situation this section is going to bring about. This is just something that has surfaced. The Minister realises that it is serious enough to warrant bringing in an amendment on it, but I am quite convinced that there are a multitude of similar situations which might arise and which do not perhaps immediately come to our minds. It is the farmhouse situation that is involved in this amendment and I shall endeavour to deal with that. The fact that the Minister has done this simply underlines the dangers of other situations which are not covered. I want to suggest one or two of them that come to my mind. For instance, what about the situation particularly in the scenic tourist areas where a farmer would decide to establish a caravan site on his land? It would seem to me that that would be very closely allied to the farmhouse holiday situation. Another instance that strikes me is the case of a riding school where an enterprising farmer or his wife could establish a riding school ancillary to their farming activities. Would these kinds of activities merit the same attention the Minister is now giving in this amendment to the farmhouse holiday scheme? They are just two things that strike me should also be catered for. I mention them because I am quite certain as time goes on and as this section comes into operation throughout the rural community it certainly will bring very serious problems in regard to many of those types of situations.

I should like to ask the Minister about another point in regard to his amendment. It would seem to me that the amendment will not relate to paragraph (c) where a prudent farmer and his wife, as they might well do, formed a company, in which they had a holding over 25 per cent, to enable them to bring in somebody else's capital. It seems that the Minister's amendment does not cope with that kind of situation, because the Minister's amendment to subsection (2) and subsection (3) seems to confine itself exclusively to the situation where a spouse is carrying on a trade.

Section 16, by virtue of paragraph (c), involves us in a situation where the trade in question would be carried on by a company. Once the farmer or his wife would have a shareholding of more than 25 per cent and be a director of that company, section 16 would come into operation. In a case where a farmer or his wife formed the company, in which they were directors and held more than 25 per cent, to run the holiday farmhouse business, they would not be saved by virtue of this amendment which the Minister is bringing in.

Mr. Crinion

Some of the farmers are very worried about this aspect of the farmhouse holiday scheme because it is really seasonal work. Other aspects of it should be clarified. Quite a number of guesthouses have to provide other services such as fishing boats, particularly in the west of Ireland. They charge for them. There is a certain amount of income coming from that and I should like to know if that will be included in the exemption.

In the hunting areas the farm guesthouses and others would be hiring out hunters during the hunting season. This would be quite a substantial amount as the cost of keeping hunters for hire is high. The charge for hunting has been increased to between £10 and £15 a day. This could amount to a large amount of money and there would not be much profit made from it. The person concerned would have a lot to show in his costs to an inspector of taxes. The same thing would apply to pony-trekking in the mountains in Wicklow and Kerry, but it would not be quite as expensive. I should like to know if these sports are included. What way will assessment be made in the case of farm guesthouses where the farm is over £100 valuation?

In a number of cases those farm guesthouses are big old houses. The farmer's wife would need to redecorate and restore them before deciding to go into the guesthouse business, as it would not pay her to build a lot of new rooms. I have seen cases where the existing house has been remodelled, and it takes some time before the old house can be brought up to modern standards and to find money to do this. You can get only the normal reconstruction grant; you do not get the Bord Fáilte grants. If the house is over £100 valuation you must keep full account of the work. If the people with a valuation of over £100 have to show all their income for tax purposes, many of them will go out of business during the next year or two. This would have a detrimental effect on our tourist trade, particularly when we have been trying to build up this type of catering and accommodation. It is the one place where visitors can meet the Irish people at home. It has proved quite successful, not by numbers, but the scheme has given a service and accommodation that cannot be got anywhere else.

Another aspect of this is that in the section one should consider a person who is on a fixed salary, such as a civil servant who has a farm. As in the case of a person with a valuation of over £100, he should be given the option—there may not be many who will avail of it—to obtain 40 times the valuation. This would be an incentive to a person who is in the £50-£100 bracket, who is earning a salary subject to PAYE and whose wife and himself are doing this only to try to secure capital to put into the farm; or perhaps they have just bought the farm or are enlarging their holding and need capital for a few years in order to provide the extra stock to meet the extra repayments until the farm is fully developed.

Mr. Cunningham

Could I query the Minister on some of the terminology in this statement? For instance, the word "accommodation" is very wide; it can cover the matters mentioned by Deputy Haughey and by Deputy Crinion, and indeed other activities as well. Does the Minister intend that the word "accommodation"' should be confined strictly to guesthouse and holiday accommodation, or does he intend that it should be widened to embrace other types of accommodation, not only for persons but for animals, for greyhound training and other activities?

If it does mean guest accommodation, then will the concession be given if the guest accommodation is not registered with the Irish Tourist Board? Must the accommodation be registered?

Under the terminology here: "in buildings on the said farm land" we can visualise something different from the farmhouse holiday. In other words, the farmhouse holiday is confined strictly to the farmhouse which is usually registered. Supposing it is a guesthouse, a hotel, a motel or other accommodation in buildings on the said farm land, would they qualify for the same tax concession? Must the accommodation be ancillary to the farming of that land? That is, if it is farmhouse accommodation, must the produce of the farm be used or, if a guesthouse is allowed for the purpose of this concession, could that be regarded as in the same category as the farmhouse accommodation? These are points on which I would like clarification.

Mr. J. Gibbons

I do not wish to prolong the discussion unduly, but before business was suspended I raised the question of certain categories of people and the Ceann Comhairle told me that it would be better dealt with under the Minister's amendment which is now before us.

As far as I can see, this amendment deals with a very carefully defined class of people, the people who cater for farmhouse holidays, who give farmhouse accommodation and for nobody else. I am concerned about a much larger class of people. Of course, I welcome the Minister's amendment in this area; I mentioned it before the Minister's amendment arrived before the House. The Minister may not be aware that there are large numbers of rural people working at trades of various kinds, such as carpenters, builders, metal-workers and so on, who do not work full-time at their trades but take commissions from their neighbours and from people in their locality to carry out certain work. The methods used in this type of neighbourly activity vary to such an extent that in my opinion they are completely outside the ambit of the Minister's amendment. If the Minister's section 16 is implemented, this whole area of rural activity will be damaged and interfered with.

I should also like to hear from the Minister what the position will be with regard to people who operate small shops in the country. I know that the people on this side of the House are very familiar with this type of rural institution. Some of them cannot be very profitable because the number of potential customers is very small. They provide a very specialised type of service. They sell bread, butter, tea, newspapers and a few odds and ends of this kind. This enterprise is usually operated by the wife in a rural family. In all these cases of rural tradesmen—he may be a metal worker, a skilled building worker, a carpenter, a plumber, or he may be an agricultural contractor on a small scale, a man with a tractor and plough, a tractor and mowing machine, or he may be a more ambitious kind of agricultural contractor with a whole range of machinery—it is not at all clear from what the Minister has told us so far how all these categories of people will fare under the new taxation arrangements. Will the self-employed tradesman farmer be taxable once his valuation passes £50? If he is, the Minister will have done a very serious disservice to people who try to augment their incomes by engaging in these extra-agricultural activities. Those who do engage in these activities are the most industrious and active people in the community. A good many of them have specialised skills of one kind or another. It would appear from what we have heard so far that farmers of this kind will be liable for the full belt of rates and income tax after the £50 level.

I should like to hear from the Minister if there is to be only one exemption—the exemption mentioned in his amendment 9 (a)—from among all these extra-agricultural activities envisaged in the case of farmhouse accommodation. What about all the other categories?

Mr. R. Ryan

Perhaps we ought to add to the list of Deputy Gibbons the hundreds of thousands of traders, carpenters, and labourers who have not got any alternative source of income and who are at present caught within the income tax net.

Mr. J. Gibbons

A different kind of animal altogether.

Mr. R. Ryan

So they are animals? We are trying to end the discrimination and privilege which certain people enjoyed. We want to have people treated equally; everybody should be equal before the law. We promised to cherish the children of the nation equally and these are children of all ages. That requires that obligations as well as rights should be equal, and this requires that everybody pays his or her fair share of taxes.

The reason why I brought in the amendment in relation to the farm guesthouse was that it is the kind of activity that several housewives can engage in for only a couple of months a year. They, perhaps, do it when the children are on school holidays and it is something which brings in a little extra income. In the olden days when it was proper to do so, the wife was rearing chickens and selling the eggs or fattening a few bonhams or something else. She would be engaged in a farming activity and it would be treated as such. The two activities are so closely related to the farmhouse, the farm occupancy, the operations of the family, that we considered it very appropriate that they should be treated as directly related to the family and to the use of family property by the family.

Now, suggestions have been made that we should go beyond that. I do not think we would be justified in going beyond that. Take the case illustrated of a person having an income by laying out caravan sites on the land or by conducting a riding school. These activities are, at the moment, liable to tax; I am not saying they are all paying tax. The Revenue Commissioners at the moment are more concerned getting after the bigger fish in the sea than chasing everybody for the small activities which, when minutely examined might throw up a few shillings or pounds.

Deputy Gibbons mentioned the case of the small shop which is providing an amenity in rural areas far beyond the actual cash or profit it is worth to the person who is operating it. Again, let us face realities. The Revenue Commissioners have more than enough to do to proceed to collect tax from the substantial people who are clearly identifiable without pursuing every huckster shop in the country to see who operates it and so on. However, if a person is lucky enough to not only have a farm with a rateable valuation of £50 but who has some other pursuit as well then they will be involved. Any person who is a carpenter or a builder, and who is employed by another will not, because he has £50 valuation and so on, be brought into the net. But, if he sells the service as a contractor as distinct from being an employee he will be brought within the net.

Mr. Colley

Does the Minister feel this should be? That is not the objective of the section is it?

Mr. R. Ryan

I believe that everybody, no matter what their origin, their location, their station in life hereditary or currently built up should pay the tax equivalent to what everybody else with a similar income has to pay.

Mr. Colley

That is not in the Bill. What is in this section is whether the farm activities of between £50 and £100 valuation should be taxed. The Minister is saying that where a person has a farm of over £50 valuation, and below £100, if he sometimes engages in an activity freelance, say as a carpenter, then his farming activities should be taxed. Is that what he is saying?

Mr. R. Ryan

What I am saying is that if a person at any time in that year of assessment, is also carrying on solely or in partnership another trade or profession then his profits from the farm will be taxed. If that person happens to be an employee that person will pay every penny that the law requires in respect of that income. Because they have not been involved in respect of their farming profits in the past we have had these disgraceful cases of people setting off profits earned from their trade or occupation against farming so as to get total exemption. We either are determined to aid these cases or we are not. What I am being pressed to do from the other side of the House is to extend the exemption provisions further and further so that instead of broadening the base for taxation, which we must do if we are to get near the more equitable codes elsewhere, and to keep the base as narrow as it is at the moment. We are not prepared to do that.

Mr. Colley

The Minister should outline which line of approach he wants to adopt in regard to this section. Does he want to have the kind of thing we talked about, the veterinary surgeon with the £25,000 or does he want to get at, on the farming side, the farmer who has a medium sized holding and who for a few months of the year may do some other activities? There is surely a vast difference between the two categories. Which category does the Minister want to get at? Is it both?

Mr. R. Ryan

I am trying to produce a tax system which will ensure that everybody, be he prince or peasant, will pay a share of tax which anybody with a similar income has to pay.

Mr. Colley

The Minister is not doing that.

Mr. R. Ryan

I am doing it by degrees. I am being asked to do it at a slower pace and to grant more exemptions by the Opposition. Do the Opposition want me to achieve this goal in one stroke? I gather that for half the time that is what they are arguing but for the rest of the time they are arguing the other. Seeing that some sections here are being agreed by some Members of the Opposition and disagreed by others I realise there are divisions opposite but——

(Interruptions.)

Mr. Molloy

Where is Willie now?

Mr. R. Ryan

Will the Opposition explain their position or remain silent? Do they want all the anomalies, all these difficulties, all these variations of treatments? If they do, then what they are saying is bring every farmer within the tax net. If that is what they are saying, then they should stand up and say it and stop this arguing and trying to have it both ways.

Mr. Colley

They believed the Minister's case for this section was to get at veterinary types with £25,000 and £30,000 per year. They believed that and assumed the Minister did not want to get at the kind of case they were mentioning but now it appears the Minister does want to get at that kind of case. Would the Minister make up his mind. Which does he want under this section?

Mr. R. Ryan

I am chasing after anybody who has a farm of £50 valuation, and upwards, who has income from a profession, a business, or a trade, and who is not employed. If a person is employed that person is caught under the PAYE system.

Mr. Colley

That is a technical point. Would the Minister stop blathering about the situation and tell us what he wants?

Mr. R. Ryan

The situation is as I have described and that is what the Opposition does not want. I am closing off some of the greatest abuses of tax avoidance in this country.

Mr. Cunningham

I should like to put two specific cases to the Minister. One concerns the farmer who is a teacher and, therefore, a member of a profession; the other is a farmer who is, say, an electrician employed by a local authority. The teacher-farmer, if he is single, earns £1,724 per year. The electrician could have an income of, say, £2,200. The teacher does not pay his income tax through the PAYE system but the electrician does. Does this mean that the teacher-farmer, although his professional income is less than the other, will be caught by this and the electrician or plumber or any other person who is under the PAYE system will go scot free?

Mr. R. Ryan

Both are employees, and, therefore, both will pay——

Mr. Cunningham

But the Minister said this would not apply to an employee who was paying his income tax under the PAYE system.

Mr. R. Ryan

He will be paying his PAYE tax. Every person who is an employee pays tax.

Mr. Cunningham

If he is already paying tax on his farm income as well he will not? Then, we will take the teacher who does not pay his income tax through the PAYE system.

Mr. R. Ryan

But he pays tax as an employee under Schedule E, whether it is PAYE or in any other way.

Mr. Cunningham

I understood from an earlier statement by the Minister that it only applied to PAYE income tax payments. Is the teacher not caught by the terminology of the section, profession; it is all Greek to me.

Mr. R. Ryan

The Deputy is talking about a profession in the social sense. Profession in the tax sense is different.

Mr. Cunningham

Would the Minister not need to amend the terminology of the section then?

Mr. Haughey

This section is going to get us into one of the greatest messes of all times. Apart from the injustice it is going to create, apart from the damage it is going to do to the fabric of society in rural Ireland, it is going to be a legislative chaotic mess. That is becoming more and more obvious. The real proof that the section is going to be a mess is the way in which the Minister has just answered Deputy Colley.

To my mind the Minister was not quite clear on what he was saying. Deputy Colley was trying to extract from the Minister the distinction that section 16 operates between a person who is engaged in a trade or profession on a part-time business basis and the person who is engaged in a trade or profession as an employee. This section does not make it clear that there is a distinction. The Minister now says there is and that subsection (1) will only apply to people who make profits from their trade or profession as independent, self-employed business people and not as employees. In reply to Deputy Colley who raised the question in regard to a person who has a trade or profession and is an employee, he said that he was taxed anyway through PAYE. But that is not the point. Both of them should be taxed and I presume they are both taxed. The fact that the employee is taxed is not the relevant consideration. What we are concerned with here is that the section involves him in paying tax on his farming activities. The fact that he is engaging, whether as an employee or an independent, self-employed person in some other trade or profession and that the valuation of his farm is over £50, will involve his farming profits being fully taxed. The fact that the Minister said, in regard to an employed person, that he is taxed already shows that he misses the whole point. I do not blame the Minister for giving what Deputy Colley has described as a misleading answer because the section is a mess. The best thing the Minister could do at this stage is to drop it, abandon it. It will involve all sorts of problems and difficulties and inconsistencies when it comes into operation, apart altogether from the social implications, as Deputy Gibbons has pointed out.

Mr. R. Ryan

I am cleaning up a polluted mess. What Deputy Haughey suggests is the theory, the beautiful theory. But the practice is, and has been, and this is widespread and is becoming more widespread and more corrupt, that many of these people are setting off the profits they earn on their extra-farming activities against farming profits and, thereby, getting total exemption for their income. There have been cases of this kind challenged by the Revenue Commissioners in court, but, unsuccessfully because this mix takes place. This is not the first time throughout the discussion on this Finance Bill that we have hit this bitter, really vicious opposition to our measures to stop avoidance of tax. It does not surprise me. Every time one moves against this there are a thousand and one anomalies. The most far-fetched cases are illustrated to show how wrong we are.

I could occupy the time from now until 9 a.m. giving lists of people who have two incomes—one from farming and one from other activities —and they claim that their income from other activities, which in some cases they spend 11 hours a day at, is only a fraction of what they claim to earn from small agricultural holdings. If I were to use the profits which they claim are from their agricultural holdings as typical of the profits from agriculture I would have a multiplier of about 5,000 in some cases as the profit which some of these people claim to be earning for every £1 of valuation that they have at present.

The ordinary small holder who is rendering service to his neighbour and is employed by his neighbour is not going to be caught by this. Is there anybody opposite who wants to defend the scandal of the veterinary surgeon who claims to be earning less than £1,500 from his veterinary practice at which he spends 12 or 14 hours a day and claims to be earning £42,000 from farming?

This can be stopped by doing what we are doing, which is a reasonable way. The Fianna Fáil Party have two choices; leave things as they are, which will allow many rotten abuses to continue, or else tax all farmers. Do they want to tax all farmers or not?

Mr. Haughey

The Minister could deal with those people under existing law. The Minister's world is full of crooked tax avoiders. The whole community are engaged in it.

Mr. R. Ryan

Ireland has the most unjust tax system in Europe because we have not closed all the avoidance loopholes that every decent society in Europe has long since dealt with.

Mr. Colley

I had intended to wait, but in view of the way the discussion has developed it appears that what I have to say would be relevant at this stage, although we are technically on the amendment. I agree entirely with Deputy Haughey's description that this section is a mess. There is no other way one can describe it. I have tried to analyse why it is such a mess and if one paid any attention to what was being said by various speakers from this side, one could see that they were mentioning, not, as the Minister suggested, outlandish examples, but examples of things that are happening every day in ordinary life in rural Ireland that are going to be affected by this section.

The Minister presented his case for this section at the beginning, and again now, on the basis of huge tax avoidance. That is the case he made. If that is what he wants to deal with there is one possible approach which I will come back to later.

The more one listens to the Minister the more one wonders whether he really wants to get at the big tax avoiders and does not know how to do it and, therefore, has to get at everybody in sight or whether his real objective is that by talking loudly about big tax avoiders, to get at people who could not by any stretch of the imagination be described as tax avoiders, through the back door by using the alleged tax avoiders as the excuse. I am not sure which is his objective but it is about time the Minister told us. When we asked him what was his objective he said it was to produce an equitable tax system whereby everybody with a comparable income paid the same amount of tax. That is not what he is doing at all in this section.

He is providing in this section for a situation in which a farmer with farmland of a valuation over £50—it could be very little over £50—who engages in some other kind of trade on a free-lance basis is brought in. Deputy Gibbons mentioned a number of examples. If this man earns £100 a year in this way the effect under this section is that as a consequence of doing that his farming activities at £51 valuation become subject to income tax. However, under the Minister's Bill, a farmer who does not engage in those activities but who has a farm with a £99 valuation does not pay any tax. In that circumstance, how can the Minister tell us that he is trying to create a situation in which people with comparable incomes will pay comparable tax?

It is all very well to mouth these platitudes but the practicality of the matter is that the Minister is not doing that. He is not trying to do that and if he gets wise he will realise it is not possible to do that and be equitable. One can be equitable in theory, on paper, but in practice one is not.

The Minister is producing a section which has the effect of penalising heavily, as against much larger farmers, small and medium-sized farmers who engage, as they do, and as has been illustrated here in many parts of rural Ireland, in other activities from which they may not earn very much money, but because they engage in these activities their farming profits are to be taxed while much bigger farmers are not to have their profits taxed. Is that not an unreasonable proposition? This is a situation which the Minister could not defend. There is no use the Minister talking about the most inequitable tax system in Europe. He is producing here a system which is far more inequitable than any system we have ever known. One of the reasons for this is that he is blinded by all this talk about huge tax avoiders.

I am giving the Minister the benefit of the doubt that he is not using this as the excuse to get in the back door. The result is that he produces a section ostensibly to get at these tax avoiders. Is he seriously telling us that there is no other way to get at them except by means of this section? Is the Minister seriously telling us that the Revenue Commissioners, with the powers they have, if they come across a case of a veterinary surgeon who, according to the Minister, claimed he was earning £1,500 from his veterinary practice and £42,000 from his farming, do not sit on that man's practice, examine it thoroughly and give him an assessment based on what they think his real earnings are? Let the man appeal against this and prove the situation. They have often done that where they had grounds for suspicion. That is the right way to get at tax avoiders and not bring in every small and medium-sized farmer who engages in activities outside his farm in a small way. Does it make sense to approach the matter in this way?

The Minister cannot be serious in telling us that this is a reasonable section, the object of which is to get at tax avoiders. That argument does not stand up to examination. If that is what the Minister means, would he listen to what is being said and realise that what he is producing here is a Frankenstein which can do enormous damage in rural Ireland. Let him get at the problem another way.

If his objective really is to get at these people, let him say so honestly. Then we will know where we stand and we can judge the Bill on that basis. A great deal of the confusion which has arisen is because the Minister is giving as his reason for this an objective which is not being dealt with adequately in this section but which produces a totally different effect from the one which the Minister says he is aiming at. Would the Minister tell us what he really wants to do? We can judge the section, and the Bill, on that basis. It is no use saying he is trying to achieve a situation in which people with comparable incomes will pay comparable tax. It is demonstrable from the terms of the Bill that he is not trying to do that. We can help him, perhaps, if it is really the tax avoiders he is trying to get at because we are as anxious, and, perhaps, more anxious, than he is to get at them but we are not anxious to have tax avoiders used as an excuse to get at the ordinary farmers in a way that their much bigger farmer neighbours are not being got at. The Minister will have to justify the inequity which he is producing directly in this section.

We feel that the number of cases of the kind the Minister described cannot be very great, but I am certain if the Minister were to have one or two of those cases tackled in the way I described it would be far more effective in stopping this kind of tax avoidance than this section could ever hope to be. The Minister will find that this section is going to produce so many anomalies that he will be coming in here with amendments and amendments to the amendments and further amendments and the whole situation will be chaotic. I appeal to him at this stage to have some practical common sense and look at what he is doing in this section.

Does he realise that what he is providing here is that a farmer, with a valuation of just over £50, who engages in some kind of free-lance activity and makes, say £100 a year is going to have his farming profits taxed while a company director can own up to 25 per cent of the shares in a large company and will not have his farming profits taxed under this section which is supposed to be producing equity, which is supposed to be aimed at tax avoiders? The Minister cannot be serious. If he really wants to get at tax avoiders, would he assure us that is his real objective and we will try to help him? If he wants to get at the other people we have referred to, let him say that and be clear about it so that we are not going to waste time in confusion. Do not let the Minister try to tell us that this section is aimed at producing equity. On the face of it, it is demonstrably untrue.

Mr. O'Sullivan

I should like to say a few words on this. First of all, I think I should congratulate the Minister on bringing in this section——

Mr. G. Collins

It is a bit late now, in every sense of the word for a section.

Mr. O'Sullivan

——to exempt farm guesthouses. It will be very well received in the area I come from where farm guesthouses are very numerous and doing a really great job from the point of view of the tourist industry. It is very sensible of the Minister to exempt these.

Mr. Haughey

But the Minister brought them in originally.

Mr. O'Sullivan

Let the Deputy come down and I will take him through them.

Mr. Molloy

Let the Deputy catch himself on now.

Mr. G. Collins

How is the Deputy fixed?

(Interruptions.)

Mr. O'Sullivan

This exemption is something for which I have been looking and it is something many people I represent asked me to get for them. For that reason, I congratulate the Minister on bringing in this section.

Mr. Crinion

Will the Deputy come back to the valuation now?

Mr. O'Sullivan

I am not going to deal with the imaginary cases that have been brought up here by some of the people who are trying to resurrect someone who may be caught in the net. The people I want to speak about are the working farmers who have built up a very good industry through running a farm guesthouse business. They are hard working people, farmers' wives who work 12 hours a day, and often longer, to give their guests something that cannot be got in even first-class hotels. They are most popular. At this late hour, I offer the Minister thanks and congratulations on behalf of the farming community operating these guesthouses.

Mr. Crinion

The Deputy is congratulating him on behalf of the farmers.

Mr. Callanan

How about the man with the £51 valuation. His farm, because he is self-employed, will be subject to tax and, as Deputy Colley said, we have the man with the £99 valuation, who is an electrician earning a couple of thousand a year, but, because he is on the PAYE, he will not be taxed. Is that fair to the farmer with just over £50 valuation? His farm will be subject to tax. Is that fair? One man with a £99 valuation, working as an electrician and earning a couple of thousand a year, will have his farm exempt while the other fellow will not.

Minister for Lands (Mr. T.J. Fitzpatrick,

Cavan): I should like to try to bring some reality into this debate, even at this late hour of the night. For some years past, many people have been worried about the unjust system of taxation prevailing. The injustice became very apparent with the advent of the pay-as-you-earn system of taxation. When that system came in people with moderate incomes, such as road workers, office employees, forestry workers and many other categories on modest incomes, became liable to paying the last penny of taxation. They had and have no way out. It is deducted from their weekly wage while, at the same time, many people earning far more than those in the categories mentioned, as well as, as somebody mentioned, solicitors, accountants, professional people of all kinds, self-employed people of all kinds, doctors and so on——

Mr. J. Gibbons

Is this on the amendment?

Mr. T.J. Fitzpatrick

(Cavan): It was the contribution on a broad basis of Deputy Colley that prompted me to say this.

Acting Chairman (Mr. Cunningham)

I was not in the Chair at the time.

Mr. T.J. Fitzpatrick

(Cavan): I will not go into detail beyond saying that many of these people earning far, far more were paying surtax; they, in their own judgment, thought they should be.

Acting Chairman

The amendment is No. 9 (a) and refers to farmhouse accommodation.

Mr. T.J. Fitzpatrick

(Cavan): It is a long time ago since we dealt with the amendment.

Acting Chairman

I have been here for the last five minutes and I want to keep the debate on the rails. The amendment we are dealing with is an amendment and not a section: it is amendment No. 9 (a) and deals with farmhouse accommodation.

Mr. Haughey

I think one member of the Executive should be enough to handle a piece of legislation like this. I do not think it is fair in this kind of situation that two members of the Government should be intervening in the debate.

Mr. R. Ryan

How many Ministers intervened in debates when Fianna Fáil were on this side of the House?

Mr. T.J. Fitzpatrick

(Cavan): How many spokesmen on Finance have the Opposition. I see Deputy Haughey coming down from the back benches by degrees. Does he intend to invade the front bench and take over from Deputy Colley? I am trying to bring a bit of reality into this debate and the Opposition do not like it.

(Interruptions.)

Acting Chairman

Order. Let us deal with the amendment now.

Mr. T.J. Fitzpatrick

(Cavan): As I said in a general way, the system of taxation prevailing over the past years, since the advent of PAYE, was most unjust.

Acting Chairman

The Minister cannot now widen the debate to a Second Reading speech. He, and other speakers who follow him, must confine themselves to amendment No. 9 (a). That deals with farmhouse holiday accommodation.

Mr. G. Collins

And if the Minister does not deal with the amendment put him out.

Mr. T.J. Fitzpatrick

(Cavan): Following a decision of the Government to try to eradicate the injustice it has decided here to tax large farmers. In fairness to the farmers' organisations, they agreed, in principle to the taxation of large farmers. This Bill proposes to tax farmers with a valuation of £100.

Acting Chairman

The Minister must deal with the amendment now. This amendment relieves taxation on those farmers providing holiday accommodation. The debate must be confined to that aspect until we get rid of the amendment.

Mr. T.J. Fitzpatrick

(Cavan): I am coming to the amendment. As a general principle, it was decided to tax farmers with a valuation of £100 or over. The Minister found it necessary to look into the position of farmers who, in addition to engaging in the orthodox profession of farming were also engaged in other gainful activities and he had to look at the position generally.

He decided that a farmer with a poor law valuation of £50 who is engaged in other profit-making activities should be brought into the net, generally speaking, and this amendment seeks to remove some people from that net. The amendment seeks to relieve the farmhouse holiday activity from income tax even if the owner of that house has a farm with a poor law valuation of £50. I consider that absolutely reasonable. That is the amendment before the House. Is there any reasonable objection to that amendment? I do not think there is. But, arising out of that amendment, we have had a long debate here which seeks to exempt a variety of categories from paying income tax even if they have farms with a poor law valuation of £50. I believe that, so long as the PAYE system compels a typist to pay income tax on an income of £25 a week, a woodworker to pay income tax on his wage, or a forestry worker to pay income tax on his wage, then the man who has a poor law valuation of £50 on his farm and, at the same time——

Mr. Haughey

And farmhouse holidays.

Mr. T.J. Fitzpatrick

(Cavan):——is earning perhaps £2,000 from some other activity should pay income tax on the lot. I make no apology for saying that. It is no excuse for trying to keep that person out of the net for Deputy Callanan, or anybody else, to say that, if a man is making £50 or £100 per year, from some activity he too must be brought into the net. We know, as a matter of common sense, that he will not be brought into the net. We know, as a matter of common sense—and the Minister adverted to this—that the Revenue Commissioners and Inspectors of Taxes have far too much to do to waste time and energy getting after these people.

Mr. Haughey

Then why are you bringing in these people?

Mr. T.J. Fitzpatrick

(Cavan): I would not be satisfied with taxing the veterinary surgeon who is, perhaps, making——

Acting Chairman

This is not relevant.

Mr. T.J. Fitzpatrick

(Cavan): But, Sir, this is part of the discussion.

Acting Chairman

It is not. We are dealing with amendment No. 9 (a).

Mr. T.J. Fitzpatrick

(Cavan): If I am to be allowed to reply to the points made by the other side, surely I can proceed to deal with those points.

Mr. Tunney

That is not the Minister for Land's function.

Mr. T.J. Fitzpatrick

(Cavan): I have heard complaints from that side all day that there were not enough contributions from this side of the House. I am here to contribute now and I——

(Interruptions.)

Acting Chairman

Order.

Mr. T.J. Fitzpatrick

(Cavan): We will run our business as we think fit. We are not in Green Street now or any place like that. We are here in this House. As far as I am concerned, I want to ensure a fair system of taxation and I will stand over a fair system of taxation. A system under which some people are taxed on an income of £25 per week and others are allowed to earn four or five times that amount and get off Scot free is not a fair system.

Mr. Crinion

What about the stud farm?

Mr. T.J. Fitzpatrick

(Cavan): That does not come into this amendment. I want to emphasise that a man with a poor law valuation of £50 on his land would, if he is a general farmer, be liable for income tax under this section. As a matter of practical common sense——

Mr. Haughey

He will be liable.

Mr. T.J. Fitzpatrick

(Cavan): No. If he is engaged in other activities, marginally he would be brought into this.

(Interruptions.)

Acting Chairman

I would remind Deputies that, if the House agrees on this amendment, Members will then be able to discuss the section itself. There is, I think, agreement on amendment No. 9 (a). Could we deal with it now?

Mr. T.J. Fitzpatrick

(Cavan): I rose to make a contribution only because, as I saw the debate develop, the other side of the House wanted to ensure that a person, not a farmer, with a valuation of £50, could engage in any other profit-making activity he liked and be exempt from income tax on profits on the farm.

Mr. G. Collins

Not at all.

Mr. T.J. Fitzpatrick

(Cavan): That was the substance of the argument put forward by the other side of the House. If Deputies opposite now wish to get away from that then we can deal with the amendment.

Mr. G. Collins

It was not said. Who said it?

Mr. T.J. Fitzpatrick

(Cavan): If my standing up here has brought the other side of the House to agree that that is an unreasonable attitude and that it is an unfair system of taxation, I am satisfied.

Dr. Gibbons

What is the position where a farm has two dwellings and one of them is used to accommodate guests in the summertime or, perhaps the farmer moves into slightly inferior accommodation and has the main house for the entertainment of guests? Another point is the situation where the business is carried on by the spouse. Suppose there is an unfortunate family where the spouse has died and the eldest daughter is carrying on the business to keep the family income up to a certain level. Surely there should be some cognisance taken in those circumstances to ensure there will be no inequity when this Bill is passed.

Mr. R. Ryan

First of all, the test will be whether the building itself is ancillary to the carrying on of the farming of the land. That will mean an assessment in each particular case. Obviously if there were a farmhouse, or farm buildings on the land, or if the farmer were to build on a piece of land away from the family home a substantial building for a holiday camp, that would not, I think, be deemed to be ancillary to the carrying on of the farming of the land. These are cases where each case will have to be assessed on its merits. I am interested in the point that Deputy Dr. Gibbons makes and I would certainly be prepared to consider the point between now and the Report Stage but we must be careful to ensure we do not extend any of these exemptions to a point at which they could be abused, where the situation might arise of a farmer renting out accommodation to a third party for the purpose of conducting a business. What we have in mind is where the farm guesthouse is conducted as part and parcel of the family activity. A case could arise in which a widower with an adult family might be able to conduct such an activity and one would not wish to see that type of case excluded. I shall see if we can make an addition. I am sure the Deputy will join with me in not wanting to promote legislation which would allow this business to be conducted by people who were not genuine. Families living at home would not like to see it rented out to somebody who lived far away; they would not, I am sure, like to see the business conducted in an artificial way by employees. The Deputy's point is a good one.

Mr. Tunney

I would like to ask one question. Earlier on reference was made to the word "accommodation". I would like to ask the Minister, having heard what his intention is in respect of this amendment, whether or not it could be successfully contested that the wife of a farmer living close to a mart engaged in the business of accommodating cattle overnight in outoffices could, under this amendment, claim exemption from tax liability?

Mr. R. Ryan

I am glad to see that notwithstanding the late hour of the night or the early hours of the morning, imaginations are in no way impaired.

Mr. Tunney

It is a practical proposition. It could happen.

Mr. Gibbons

A Dublin-based Government would not know anything about that.

Mr. R. Ryan

There are many members of this Government who know a great deal more about farming than do members of the Opposition, if one is to judge by the contributions made by some Members to this debate.

To come back to the point Deputy Gibbons made, the problem he sets would not involve the farmer in question in tax liability because his daughter would be regarded as a separate person and, to use a phrase that has a tax meaning—I am not using it in any other way—"a connected person". A spouse and farmer are regarded as connected persons for tax purposes. Therefore, the non-farming activity of the wife would be regarded a non-farming activity of the farmer. The daughter would be in a separate category and, therefore, the problem Deputy Gibbons visualises would not arise.

Mr. G. Collins

Could the Minister say what the position would be if a farmer with a valuation of £50 or over, but less than £100, keeps a few greyhounds, which many farmers in the west and south do, found at the end of the year he had a few greyhounds to dispose of—what would be the tax position of that farmer?

Mr. R. Ryan

Does the Deputy consider the keeping of greyhounds is a farming activity?

Mr. G. Collins

I am asking a question through the Chair and I would like an answer to it. If the Minister answers my question I will answer his.

Mr. R. Ryan

If the greyhounds are regarded as a business—for instance breeding of greyhounds for sale—such an activity is at present subject to tax.

Mr. Haughey

The Minister can take it from me that greyhounds are never kept as a business.

Mr. R. Ryan

Would the Deputy agree it might be a loss-making business?

Mr. G. Collins

Am I right then in taking from what the Minister says that a farmer with a valuation of £50 or over, who keeps a few greyhounds and sells the pups is liable for tax on his income from his farm, even though the valuation is between £50 and £100?

Mr. R. Ryan

Yes, he will be liable. The method of assessment in each case is based on whether or not the farmer keeps greyhounds as a business or a hobby.

Mr. G. Collins

The Minister knows as well as I do that dogs are not kept as a hobby, except by those who can afford this particularly expensive hobby.

Mr. R. Ryan

If the Deputy lets me know of any cases in which people who carry on that trade disclose particulars to the Revenue Commissioners——

Mr. G. Collins

I am talking of people who have been got at by the Revenue Commissioners in regard to their income from greyhounds, greyhound breeding and greyhound selling. I take it that farmers with valuations of £50, and over, who keep greyhounds will now be subject to income tax.

Mr. J. Gibbons

And capital gains tax. Do not forget that.

Mr. R. Ryan

There is no capital gains tax on the sale of greyhounds.

Acting Chairman

Does this come under amendment No. 9 (a).

Mr. R. Ryan

It does, of course, because they are kept in accommodation which is ancillary to farm income from farmland.

Mr. G. Collins

Perhaps the Minister might deal seriously now with my question.

Mr. R. Ryan

Whether greyhounds are kept as a trade or business is a matter for assessment in each case by the local inspector of taxes. If they are so kept, the income is liable to tax and the consequences which follow.

Mr. G. Collins

Can the Minister tell me—perhaps, he can get the information from his advisers—when greyhounds are kept as a hobby there is no income from them but if they are sold, can the pursuit still be regarded as a hobby?

Mr. Gallagher

Can the Minister tell the House how it is proposed to define what farm guesthouse means? For instance, one house with ten bedrooms is registered as a farm holiday home. Another might have two or three bedrooms. How does the Minister define "guesthouse"? Is it proposed to treat these two houses equally?

Mr. R. Ryan

We know that the size of farm houses can vary greatly and it would be wrong to put a particular limit on the amount of accommodation. Some people have sufficient enterprise to add on to the original accommodation. We would not want to set a limit, but it is safe to say that, where a building got to the stage at which it was clearly no longer a farm building but was, in fact, a guesthouse per se and the business conducted was not in any way generated by the business of farming, it would then move out of the farming activity and be no longer capable of being considered as a farming activity.

We come again to the area of merit of each particular case and we are not capable of a precise statutory definition of the many types of activity involved.

Acting Chairman

Could we now dispose of the amendment?

Mr. Colley

The amendment is agreed.

Amendment agreed to.

Question proposed: "That section 16, as amended, stand part of the Bill."

Mr. Colley

I do not want to prolong the discussion but on this side of the House we are totally dissatisfied with section 16. As Deputy Haughey indicated a long time ago, it is not really possible to amend section 16 satisfactorily if the Minister is not prepared to do it. Furthermore, we are presented with the difficulty that to vote against section 16 and take it out of the Bill altogether would probably make such a mess of the Bill that it would not make any sense. I do not, therefore, propose to call for a division. However, I want to make it clear, as we have tried to make it clear in our contributions, that we are totally dissatisfied with this section and with the consequences flowing from it.

Question put and agreed to.

SECTION 17.

Question proposed: "That section 17 stand part of the Bill."

Mr. Crinion

How is the Minister to ascertain the valuations, particularly where land is registered some in the husband's name and some in the wife's name? I understand that there is no record in the local authorities to show which is which, whether two farms are actually owned by husband and wife. I should like to know if the Minister has any way of deciding this.

Mr. R. Ryan

It is not unusual even under existing laws for the necessity to arise to apportion valuations, even if in the valuation books properties are not acceptably valued.

Acting Chairman

There are a number of Deputies talking.

Mr. R. Ryan

Are the Members more interested in the Department of Lands or in what the Minister for Finance is saying? It is not unusual for apportionments to be made as things stand at the moment: they are made by the inspector of taxes and, of course, it is open to anyone to object to the apportionments made. They are usually done by agreement. It is very rarely that agreement is not reached on the apportionments that have to be made.

Mr. Crinion

What I was referring to was where land is in Jane Smith's name and maybe in a parish about two miles away there is Captain Smith. How is the inspector of taxes to know that Captain Smith and Jane Smith are in actual fact husband and wife, because it will not be shown in the local authority records?

Mr. R. Ryan

It is extraordinary the information and enlightenment the Revenue Commissioners have, and of course I am sure that if they make mistakes the parties will not be long bringing it to their notice.

Mr. Haughey

There are several provisions in this legislation where the Minister and the legislation positively bleed farmers from the point of view of income tax in a way which is worse than the way any other section of the community is treated. No matter what else you may say about the income tax code, it always seeks to avoid a situation where anything is taxed twice. It is typical of the Minister's approach to the farming community that that fairly sate principle in all income tax legislation is being callously abandoned here in section 17.

The situation, as I interpret section 17, will be that the same man can be taxed twice on a number of occasions. The indication in the section is that if farmland is owned but let, it is going to be regarded as taxable by the owner. Similarly, if land is occupied by letting from somebody else it is going to be taxable by the person letting it. So, as the section is framed, we undoubtedly will have a situation all over the country where the same land is going to attract taxation by two different people. I want to put forward the view that that is iniquitous. I do not think it applies anywhere else in the taxation code and it is indicative of the Minister's cold, calculating callous approach to the farming community and indicative of the fact that he seems to have somewhere in his mentality and in his make-up some fundamental animosity towards the farming community as a community. That is clearly illustrated by the provisions in section 17.

I also want to raise the question of tenants in common and to ask the Minister the way in which they will be dealt with, particularly in the case of where one of the tenants in common would not be living on the farm and, indeed, might not be living in this country. This happens very often in rural Ireland, particularly in the west of Ireland. I want to suggest to the House that section 17 is unique from the point of view of income tax legislation in that it brings about a situation where the same land will come into assessment for tax in the case of two different individuals.

Mr. R. Ryan

Of course, the two individuals may not necessarily be liable for tax: they may not be making a profit out of the same piece of land. If "A" owns a piece of land, which we shall call "X" and occupies a piece called "Y"; then if he puts "X" and "Y" together and has a £100 valuation, then "A" will become liable for tax if his profits are sufficient. If "B" owns land "Y" which is occupied by "A" and land "Z" and his profits come to more than £100, the same question arises as to whether "B" is liable for tax. He should only be liable for tax on the profits he makes. If he profits, say, out of the rents that he is receiving from the land occupied by "A", he is making a profit which is taxable. If he is not making a profit then the liability does not arise. If he is making a profit, it is proper that he should pay. There is no question of taxing the same profits twice.

Mr. Haughey

This happens to be farmland and the people happen to be farmers, and for one isolated instance in the whole taxation code in this country we are going to make the same source liable to the same tax twice. Just because it happens to be farmland and the people happen to be farmers, in one isolated instance in the whole taxation code in this country we are going to make the same source a liability for tax in the hands of two separate, distinct people. That is what you are doing. Do not deny it. Even Deputy O'Sullivan will not stand for that.

Mr. R. Ryan

I will draw the parallel to show just how right we are. Supposing you have an accountant who has an office on the North Strand and he may make a profit out of his occupation and pays tax on it but the office may, in fact, be owned by somebody else who gets a rent out of it, so the owner of the office will have to pay tax out of the rent which he gets for the property. There you have an identical case where the one piece of property is yielding profit to two different people and they pay the appropriate tax on their share of the profit out of that piece of property. One pays it on the rent which he gains and the other pays it on the profit which he makes out of the use of it.

Dr. Gibbons

To be quite clear on this, does this apply to 11-month letting of land as we understand it now?

Mr. R. Ryan

Conacre is not occupation. Occupation has to be for the full year.

Dr. Gibbons

Conacre is a very limited activity. I understand conacre to be the growing of corn which is distinct from the——

Mr. G. Collins

Would the Minister define "conacre"? Does this apply to what I would term "level 1" or "level 2" conacre?

Mr. R. Ryan

There are different understandings in different areas.

Mr. Leonard

If it is on a three-year basis, what happens?

(Interruptions.)

Mr. Colley

I want to ask the Minister a question arising on this section and perhaps it needs reference to the following section as well to answer it. It was mentioned by Deputy Haughey and the Minister has not referred to it in his reply. It is the question of how the situation of joint ownership is treated, whether it be tenancy in common or joint tenancy. It would appear to me on the face of it that if you have a situation, which is quite common, where two brothers become joint owners of farmland of which, we will say, the valuation is £150, it would appear that if, as is common enough, one of the brothers is occupying the farm and working it and the other is living in London and working there, the effect would be that that farm would not be liable to tax because the joint ownership would mean that the rateable valuation should be apportioned between the joint owners. But if, on the other hand, in a similarly arising situation you had the two brothers working the farm together then it would seem that it should be liable to tax because the ownership and the occupation would be of farmland of rateable valuation of £150. I wonder if my interpretation is correct. Would the Minister indicate whether it is and, if not, why not? If it is correct, is this a situation that he contemplated?

Mr. R. Ryan

If the land is owned jointly by brothers one of whom is absent, the other one would be in occupation of the total property of £150 valuation and therefore he would be liable to tax because he would be in occupation of land in excess of £100 valuation. Is that the point?

Mr. Colley

No. He would not be beneficially entitled——

Mr. R. Ryan

He must be in occupation.

Mr. Colley

Yes, but for the purpose of occupation under the rating provisions, the rateable occupiers would, I think, have to be the two brothers.

Mr. R. Ryan

We are not dealing with rateable occupancy here. What we are concerned with is actual occupation. There are all kinds of difficulties here. We have to deal with actual occupation because there could be cases where a person could not, for instance, take out a grant of probate and make a profit on it—this is not uncommon, you know. Such person could remain in occupation of land for decades and this often happens. We have to deal with real occupation and be in no way concerned with who may be registered as the rateable occupiers.

Mr. Colley

I do not think the Minister is correct in that but I will pursue it perhaps on the next section.

Mr. R. Ryan

I could refer the Deputy to section 18 of the Finance Act, 1965, which states that occupation in relation to any land is having the use thereof.

Mr. Meaney

I should like to ask the Minister if he does not think the section cuts completely across the land regulations. After all, we in this country are experienced enough to recognise that it is the Land Commission we have to make application to when dividing a farm, no matter who you may be. The Land Commission accepts that you can set aside, I think, five acres. Is this section cutting across the Land Acts completely? Does that mean that you have to comply with both the Land Commission regulations and with the regulation of the Minister for Finance? A person may come into the country or there may be somebody local who just wants a site of five acres. That, as a rule, is allowed by the Land Commission. Otherwise they say it must be a viable unit. This section is cutting completely across the Land Commission regulations. It is something new. I should like the Minister's comments on that.

Mr. R. Ryan

Section 17 does not confer proprietory rights on anybody. It just confers propriety. It simply refers to the use of the land. If somebody has the actual use of land, he is in occupation of it, and the rateable valuation of the land is reckoned for tax purposes. It is only the use of the land that is reckoned. The fact that a person would have the use of land would not in any way confer a title on that person in respect of that land.

Mr. Meaney

As regards the use of land, the Land Commission already recognise that. For the purpose of section 17, suppose the valuation is £101. The Land Commissioners up to now have recognised that that man can now transfer up to five acres to anybody he likes. The Minister now says to that person: "You cannot do that. You must comply with my regulations." That is contrary to Land Commission regulations.

Mr. R. Ryan

No. The Minister for Finance or his officials have not power to stop anybody from transferring land or to confer title on anybody.

Mr. Meaney

Can I take it section 17 is still subject to Land Commission regulations and the Department of Lands, that section 17 is secondary to Land Commission regulations? Can I accept that as definite?

Mr. R. Ryan

Section 17 is only concerned with tax liability.

Mr. Meaney

Yes, but all this goes into the question of revision of land. Would the Minister say that it is secondary to Land Commission regulations as they apply at the moment?

Mr. R. Ryan

If I was certain what the Deputy means by secondary liability. This section is not related to Land Commission regulations.

Mr. Meaney

It is related to them because under the Land Commission regulations, one of which refers to a "viable unit" if a man wants to sell a plot of land, what has happened up to now is that a person can sell up to five acres. The Land Commission gave that permission. From now on, if this section is passed, the Minister can decide if the person sells a site it would put him below the valuation. This is the point I wish to make clear.

Mr. R. Ryan

I am in some difficulty about what the Deputy wants. I want to emphasise this has nothing whatsoever to do with title. It does not restrict or accelerate land transfers. If somebody deliberately transfers the ownership of five acres, that alienates that property from himself to another person, then that ownership will pass out of the assessment which will be taken into account in considering whether he has a valuation of £100.

Mr. Meaney

Can I take it that what the Minister says is that it is the regulations of the Department of Lands and those of the various Land Acts which are still the main consideration as regards the revision of land or the selling of land? I am still not clear on this question. Suppose it is £101 valuation and the person sells five acres for building or a factory site and that it reduces the valuation to £99 or £98, the Department of Finance cannot intervene and say the person must still be over the £100 valuation. The person might only sell one acre and the valuation might be reduced to £100.25. What I want to know is whether the Department of Lands are still the main factor.

Mr. R. Ryan

That does not arise.

Mr. Meaney

It does arise. I foresee a conflict here.

Mr. Colley

If I might come back to the point I raised earlier about the two brothers in joint ownership, could I refer the Minister to subsection (3) of this section which deals with the situation where farmland is beneficially owned by an individual—I am leaving out the wife, for simplicity— jointly with any other person or persons but is not occupied by the individual either solely or jointly with any other person or persons. That describes the situation we are talking about, where it is owned jointly by the two brothers, occupied by one but not by the other. It goes on to say:

The individual shall be deemed to occupy farmland the rateable valuation of which is an amount which is equal to such part of the total rateable valuation of the land of which he is a beneficial owner as is proportionate to his or her share of the beneficial owner's said land.

On the interpretation of that subsection, how would the situation which I have described be treated—joint ownership between two brothers, one of whom is occupying the land and the other, although a joint owner is, say, living abroad? Who would be liable for what?

Mr. H.P. Dockrell

It is the person who is in occupation. It is doing no more than that. I do not blame Deputy Colley.

Mr. G. Collins

Do not blame Deputy Colley for the confusion.

Mr. R. Ryan

It is not that at all. It is the actual occupation by the person who is present—the useful occupation of the land.

Mr. Colley

Just to get the position clear, supposing he were not living on the farm but was working in Dublin. What would his position be?

Mr. R. Ryan

He still would not be the occupier.

Mr. Colley

But does not this subsection relate to a person who is not in occupation? It is not occupied by the individual or his wife.

Mr. R. Ryan

The man who is absent would not be involved in this matter. The man who is resident would be in useful occupation.

Mr. Colley

I am afraid that will not do. The Minister will remember that I talked originally about either tenancy in common or joint tenancy. As the Minister knows, that means that each of the partners is the owner of an undivided moiety and therefore you cannot say that either is entitled to a £75 valuation worth of the land, especially when he is not in occupation. The only connection he has is his joint ownership. Therefore he is owner of an undivided moiety and how can you say that £75 is the valuation of what he is entitled to? The Minister is not entitled to do that. The result would be that some people not occupying the land would have to pay tax under this subsection. It ought to be clear.

(Interruptions.)

Mr. Colley

That means they are each liable for all of it, including the man living in Dublin who does not occupy it at all.

Mr. R. Ryan

He has a right of indemnity over——

Mr. Colley

Where does he get the right of indemnity?

(Interruptions.)

Mr. Colley

Accountability, on the face of it, would appear to lie on both brothers, one in occupation and the other not in occupation.

Mr. Esmonde

That would be my reading of it.

Mr. Colley

If you can break it up you get the situation I am describing in which neither should be liable; though the Minister stated the man in occupation is liable I think he should not be. Suppose you cannot break it up because of joint ownership and you cannot decide who is entitled to what, it would appear on the face of it that both of them are liable including the man who has no connection with it at all, is not working it and probably getting nothing from it.

Mr. R. Ryan

But if he is not working it he has no profits from it.

Mr. Colley

But he is deemed to be in occupation under this. That is the point.

Mr. Haughey

All these problems that we are talking about spring from a basic misconception. In my view he should apply the taxation principle of only taxing the same thing once and let him opt for one criteria or the other—ownership or occupation. We should base this whole thing on the occupation of land and two people cannot occupy the same land at the same time and have the liability attaching solely and exclusively to occupation and nothing else. This would get rid of all the problems. But the Minister in some sort of legislative cupidity wants to catch everybody for everything. He wants to make people liable because they are beneficial owners even though they do not occupy it, or might have the land let and he wants to catch people who take land on letting. That is where the whole problem in this section arises.

Mr. R. Ryan

The profits here arise out of use. It is the absent brother we are talking about here. Even if he is deemed to be in occupation of part or whole——

Mr. Haughey

It is difficult to hear the Minister.

Mr. R. Ryan

Even if an absent brother is deemed to be in occupation, he is not making profits out of farming. The brother who is in occupation is using the farm; whether he is a joint tenant or is a tenant in common, he is in occupation of the total property. Therefore, he is in excess of the £100 rateable valuation and he becomes liable.

Mr. Carter

Could I ask the Minister a question? When replying to section 17, which is for the purpose of extracting tax, did the Minister state that land let on the 11-month system would not attract tax but that land let for longer periods would? Is this correct?

Mr. R. Ryan

The owner would be liable to tax.

Mr. Carter

I am not referring to who would be liable for tax. I am referring to the fact that 11-months' letting is out of the net, longer letting is in the net. Is this not so?

Mr. R. Ryan

That is correct.

Mr. Carter

Arising from that, is the Minister not aware that we have been advocating in this House for a great many years the undesirability of letting land on the 11-months' system, and further, that we were striving to advocate, in some cases with some success, that land should be let for five years or longer periods in order to give the person who would be taking the letting a better chance of better husbandry? We have always claimed that 11-months' letting promoted bad husbandry. Therefore, I would infer from what the Minister has stated that this section as it is now framed, is calculated to cut across the development which various Ministers and various Deputies in this House advocated in farming circles. I refer back to the statement made by Deputy Haughey that this clause in the section, as it is set down here, is only calculated to promote bad husbandry, apart from whatever tax it may gain the Minister.

Mr. R. Ryan

I can understand Deputy Carter's problem but we are dealing here with financial matters and we have to assess it on what is actually occurring. This is the only fair way in which we can approach the matter. We have to assess the facts as they exist in any particular year.

Mr. Carter

I appreciate the Minister is purely concerned here with revenue. It could be submitted, from any side of the House, that the Minister in the long-term should also be concerned with long-term development and, therefore, the person who sets out to invest on the basis of a long-term arrangement should always get preference over those who could be deemed to be in and outers. That is my point.

Mr. R. Ryan

We will certainly watch the situation and if it has the undesirable social consequences the Deputy has in mind we will see what can be done to correct this.

(Interruptions.)

Mr. R. Ryan

To give you an idea of a case, if you take 100 acres where 95 acres are given away but if five acres or even less are kept upon which to build a house, together with a small holding, then there has been what lawyers call an alienation of the property of 95 acres, and if there is a genuine legal transfer then that will be fully recognised. The fact that someone keeps five acres for himself, if there is a division of 95 to one party and five to another and if this effectively breaks up the £100 holding declared previously, well, so be it, that is the luck of the transferees in the particular case and it has to be recognised as being valid.

Mr. Meaney

Does the Minister agree with the Land Commission's definition of an accommodation holding or does he make one of his own in the Department? There may happen to be a case of a father who transfers to his son under the existing law and he decides to keep an accommodation holding. The criterion should be what the Land Commission consider in this case. I do not want this second law coming in, so to speak. I am not happy about this and it is very, very important.

Mr. R. Ryan

If it is a transfer it is a transfer and it does not matter to us how this is assessed, whether it is the Land Commission or the parties themselves or somebody else buys and splits up the property. If the property is transferred then there can be no further query as to the motivation behind it.

Mr. Meaney

If it is a clear transfer.

Mr. R. Ryan

There can be no question as to the motivation.

Question put and agreed to.

SECTION 18.

Question proposed: "That section 18 stand part of the Bill."

Mr. Colley

Could I ask the Minister, in regard to subsection (2), to elaborate a little more on what is meant by "two or more distinct occupations"?

Mr. R. Ryan

We are dealing here with physical occupation.

Mr. Colley

I appreciate that but "is divided into two or more distinct occupations" does this mean two separate people occupying land valued as a unit but for their own purposes operating quite separately from each other? Is that what is intended?

Mr. R. Ryan

That is right.

Dr. Gibbons

Suppose this happens to be farmland that is let to the local hurling team or the local football team for the year. What is its position then?

Mr. R. Ryan

The land would be the owner's. Is the Deputy suggesting that it might be land, from, say, a valuation of £50, a field which would be——

Dr. Gibbons

A field of six acres, perhaps, valued at £6.

Mr. R. Ryan

Here again you face the situation which you were discussing earlier. The football club would be unlikely to have another 94 acres so presumably they would be liable. But if it was a 100-acre farm the mere fact that it is given over to an occupation for a year would not change the ownership or liability.

Dr. Gibbons

But it might reduce the valuation of the available land from £102 to £98.

Mr. R. Ryan

Yes, but the ownership would remain the same. It arises out of ownership and relates to whatever profits there may be from the occupation of the land by the hurling club.

Dr. Gibbons

Would you set out to apportion the rateable valuation in that case?

Mr. R. Ryan

Apportionment would not arise in that case except where the football club were people who had ownership of land which, together with the football field would bring them above the £100 level. That is most unlikely to happen.

Dr. Gibbons

But the owner would not be in profitable occupation of it.

Mr. R. Ryan

But he could be liable to the ownership.

Dr. Gibbons

What is the point of apportioning at all then?

Mr. R. Ryan

The facility to get fertile ideas appears to be increasing as the hours go by. The Deputy has chosen a rather unusual case. You could have a case where two people could be in possession of a piece of land which was valued as a unit but you would have to make an apportionment of their respective portions of that land to add to their other holdings to see whether or not they came within the £100 limit.

Mr. G. Collins

Where the fee for the field which the hurling club or the football club might have was in excess of £100, that would have to be regarded as income. Therefore, if the farmer had a valuation of over £50 he would be taxed on his farm income as a result of the fee which he gets from the local GAA club. Is not that so?

Mr. R. Ryan

Yes, it could so happen.

Mr. Colley

This is hardly getting at tax avoidance.

Mr. R. Ryan

It shows the advantage of being a philanthropist and giving the football field for nothing to the local club.

Mr. G. Collins

I hope the Minister will be available to meet deputations from the different GAA clubs throughout the country at a later stage.

Mr. R. Ryan

Again, I think the inspectors of taxes have more than enough to do without chasing around counting hurling fields in the country-side.

Mr. Carter

In section 18 it states "a part is and a part is not farm land" what does the Minister deem not to be farm land in that context?

Mr. R. Ryan

You could have various definitions in the valuation records of lands, farm land, leasing lands, gardens and so forth. There can be certain different descriptions.

Mr. Carter

With respect, I think this is a very bad definition of it because it is quite clear what is farm land. It is not at all clear what is not farm land. Therefore, if one were to describe it as the Minister described it —he described it as gardens and so on—at the same time it is land.

Mr. R. Ryan

Quite often in the valuation books you will see where a property is rated at a certain sum for buildings and a certain sum for lands, but part of the lands might not, in fact, be used for farming. There are recognised areas of parklands and so forth, which are not deemed to be farm land. In such a case one would exclude what is regarded as parklands as non-farming lands. Of course, this exclusion would operate to the advantage of any potential taxpayer.

Dr. Gibbons

What about woods and bogs?

Mr. Carter

It seems a rather remote way of expressing what is involved, whether it is arable land or otherwise or what type of land. It seems to me to be abstract and vague.

Mr. R. Ryan

Woodlands and park lands——

(Interruptions.)

Mr. Meaney

There are many places in the country where farmers let old wasteland or quarries for dumps for local authorities. If a farmer lets such land to the local authority as a public dump and he gets say, £150 a year income from it, what is his position?

Mr. Colley

He will pay on it.

Mr. R. Ryan

A dump would not be farmland but if he is making a rent out of it——

Mr. Meaney

It is still part of the farm and is rated as part of the farm even though he has no good use for it.

Mr. Haughey

Quarries are out, specifically.

Mr. Meaney

It is a disused quarry.

Mr. Haughey

It does not matter; quarries are out.

Mr. R. Ryan

That would come under a different assessment. That is an income from a property. It is not a profit from a farm. It might well, if the valuation books have not been changed, be included in the valuation register. That is the purpose of section 18 so that——

Mr. Meaney

I would like the Minister to exempt land that is let one way or another to local authorities because it is serving a very useful purpose at the moment.

Mr. R. Ryan

If this is not farmland, if it is a hole, or a disused quarry it is not farmland, so that would be taken out of the computation of what the person had as farmland. If there was a rent from it he might have to pay a tax on the rent but not arising out of his farming activities. Under the section these apportionments can be made, but accepting that these things are not all dealt with with sufficient refinement in the valuation records.

Mr. Meaney

I want the Minister to exempt property let to local authorities for some public use.

(Interruptions.)

Question put and agreed to.

SECTION 19.

An Ceann Comhairle

Amendment No. 10 stands in the name of the Minister. Amendments Nos. 11 and 12 are related. I would suggest that we take amendments Nos. 10, 11 and 12, in the name of the Minister, together.

Mr. R. Ryan

I move amendment No. 10:

In paragraph (a), page 10, lines 53 and 54 and paragraph (b), lines 57 and 58, to delete "which would, but for this section, be chargeable" and to substitute "appropriate to the profits or gains from farming."

Section 19 provides for a sliding scale of charge where a farm is of £100 valuation or somewhat over that figure. The scale of charge is one-twentieth of the tax at £100 plus a further one-twentieth for every £1 over £100. That means that the tax charge for a farmer over £101 should be one-tenth of tax and at £102 it would be three-twentieths of the tax charge. The section, however, as it stands is not adequate to deal with cases where there is other income in addition to farming income. The amendments are designed to cater for this situation by relating the relief to be given under this section to the tax appropriate to farm income.

The first amendment provides for the textual alteration in section 19 by substituting the words "appropriate to the profits or gains from farming" for the words "which would, but for this section, be chargeable". Amendment No. 11, makes a consequential alteration of the proviso to the subsection. The proviso as it stands provides that the tax chargeable in any case is not to exceed, by an amount greater than £40, the amount which would be chargeable if the rateable valuation of the farm was £1 less than the actual rateable valuation. The significance of the £40 is that a multiplier of 40 is used in the notional basis of assessment as the method of income per valuation and it was considered reasonable that in the sliding scale the tax charge should be limited to the figure of not more than 40 times the increase in the valuation. When a sliding scale is being applied the proviso as it stands caters for the case where there is only farming income. It should not apply where there is other income since in that case it would operate to restrict the tax appropriate to the other income. There would be no justification for this and the amendment to the proviso now ensures that this limitation will only apply when there is no other income than that from farming.

The third amendment adds two new subsections. The new subsection (2) spells out how the tax appropriate to farming profits is to be arrived at, namely, on a proportionate basis taking the farming profits as computed on whichever basis the farmer elects. The new subsection (3) says the section is not to apply where the rateable valuation of the farm exceeds £119. This is the point at which the sliding scale expires in the ordinary case. What is at issue here, however, is the case of a farmer with a farm of, say, £220 valuation which he sells half way through the year of assessment. Such a farmer ought not to get marginal relief but he could argue that under section 17 (6) he is deemed to occupy land at a rateable valuation of £110 for that year and but for the present subsection he would seek marginal relief for it. He is, of course, chargeable for the year either on an accounts basis or on the notional basis by reference to profits of £4,400 less deductions for rates, labour and depreciation.

Mr. Colley

On what is the notional figure the Minister gave based? Which valuation is that based on?

Mr. R. Ryan

He could argue that he is deemed to occupy land at a rateable valuation of £110 for that year by virtue of section 17 (6) and but for the present section he would get marginal relief.

Mr. Colley

In order to deal with these amendments it is necessary to get a certain amount of clarification from the Minister on the section which he is amending. In regard to paragraph (a), the second line where it says "...does not exceed £100" is that intended in practice to mean that it equals £100?

Mr. R. Ryan

In the case of rateable valuation amounting to £100.

Mr. Colley

In other words, it does not mean less than £100. It means precisely £100. It is rather oddly expressed—"does not exceed £100" when it is intended to mean "is £100" exactly. Taking paragraph (a) as it stands and as the Minister proposes to amend it, it appears to me that what it seems to say is that a person whose valuation is precisely £100 will pay one-twentieth of the tax in the terms of the amendment, appropriate to the profits or dealings in farming. Is it possible that that could cover the notional valuation and that the effect of paragraph (a) would be that the farmer would be paying tax amounting to one-twentieth of what he would pay on the notional valuation calculated on £100?

Mr. R. Ryan

He would pay one-twentieth of the tax. I am not sure what the Deputy's point is.

Mr. Colley

Could that mean that he would pay one-twentieth of what the tax would otherwise be, calculated on a notional basis of a valuation of £100?

Mr. R. Ryan

Yes.

Mr. Colley

One-twentieth?

Mr. R. Ryan

We want to avoid the situation of the man who by reason of having a valuation of £100 or near that and pays tax would have a smaller net income than the man with £99 valuation. That is why we have these very small fractions near the £100 and rising as a person gets away from the £100 point.

Mr. Haughey

I want to ask the Minister why does he exclude people to whom section 16 applies from these marginal provisions?

Mr. R. Ryan

Because the man under section 16 has income other than farming income. Section 16 is substantially an avoidance section.

Mr. Haughey

I must confess that I am not too clear. From Deputy Colley's questioning, it appears that paragraph (a) now apparently applies to a man whose valuation is £100 exactly. Why does it not say that? Why does it say "does not exceed"? It does not say that. The wording "does not exceed £100" is meant to bring in the £50 to £100 range and that would only apply to people who are brought in because of section 16, but the section says that the people to whom section 16 applies are not involved.

Mr. R. Ryan

If it exceeded the £100 a different exemption is involved.

Mr. Colley

Why do you not say "whose assessment is——"?

Mr. R. Ryan

It would not be two-twentieths.

Mr. Colley

Why do you not say "the rateable valuation of the farmland occupied by him for that year of assessment is £100" no more?

Mr. R. Ryan

And no more.

Mr. Colley

Well, if you wish.

Mr. Haughey

These are marginal relief provisions. Is that not so? They do not apply at £20 and £50. They only apply at £100. Would it not be fair in the case of people who are brought in by section 16, for whom this £50 valuation is an important point, to apply the same sort of marginal relief provisions at the £50 for those people as the Minister is applying for these other people at £100? What is the reason for not doing it?

Mr. R. Ryan

Section 16 is only applied to people who have incomes outside farm incomes. Therefore they are not capable of the same refinement. There is not the same sudden difference between them and people who are below the £50 mark. Two farmers who have no other occupation, one of whom is on the £100 mark and the other at £99, could have a very significant difference in their net incomes. If the man at £100 was to be subjected to——

Mr. Haughey

The man with £105 or £110 could have off-farm income as well.

Mr. Colley

Of course, he could.

Mr. Haughey

That argument does not apply. If marginal relief is justifiable in one case it is surely justifiable in another. If a man with £49.50 valuation does not come in under section 16 provisions and the man at the very point of £50 does, surely that is a case for marginal relief.

Mr. R. Ryan

Section 16 is primarily an avoidance measure. It would not be appropriate to give marginal relief in that kind of case.

Mr. Haughey

Section 16 will apply to all sorts of people who never attempted to avoid tax in their lives and for whom tax was not a relevant consideration up to now. This will apply to people who are in the Minister's books tax avoiders. Would he think about it and see if he should not apply it at the £50 level for the section 16 people?

Mr. R. Ryan

I will.

Mr. Cunningham

What is the difference between a farmer with an income outside of farming from £50 to £100 and from £100 up?

Dr. Thornley

It is nice to see Deputy Haughey and Deputy Colley acting in accord.

Mr. G. Collins

It is nice to see Deputy Thornley acting in accord with himself.

(Interruptions.)

Mr. Cunningham

In regard to the case of a farmer over £50 valuation who has an income by way of trade or profession outside of farming and who for that reason becomes subject to income tax, what is the difference between him and a farmer with over £100 valuation who also has a trade or profession outside of farming? Is there any difference?

Mr. R. Ryan

The numbers of people involved are quite different——

Mr. Cunningham

No. As far as the tax element is concerned is there any difference between them?

Mr. R. Ryan

You mean on a matter of principle——

Mr. Cunningham

From the point of view of paying tax. In other words, is there any difference between a farmer having £100 valuation and £50? Would they come under the same tax regulations and eligibility to pay tax?

Mr. R. Ryan

No. There are a number of differences.

Mr. Cunningham

Let us forget the other differences. I want to know from the point of view of tax is there any difference?

Mr. Haughey

The Minister is totally wrong in his approach in regarding all the people to whom section 16 will apply as criminals and people who have been or are going to go around avoiding tax. Section 16 will apply to many ordinary, straightforward, legitimate income taxpayers who up to now have had off-farm Schedule D incomes and have been paying tax on them. The only difference with regard to these people is that these new provisions will make them liable to pay tax on their farming profits also if their valuations are between £50 and £100. It is totally wrong for the Minister to be sweeping all these people aside as tax avoiders. There may be one or two of them tax avoiders but the vast majority of them will be ordinary straightforward legitimate taxpayers. He cannot deny them marginal relief at the £50 point just because he has some vague idea that they have been or will be tax avoiders.

Mr. R. Ryan

I think Deputies will agree that there will be a substantial difference between the tax liability of people in the £49-£50 valuation group and those in the £99-£100 valuation group. The certain difference between being outside and being within is very much greater at the upper bracket than it is at the lower one. It is a very good reason for having marginal relief at the upper one.

Mr. Haughey

In some cases it would be far more traumatic at the £50 limit than at the £100 limit.

Mr. Colley

I wonder has the Minister sold to himself or had it sold to him that section 16 is a tax avoidance measure to the extent that he is really missing the significance of what is happening in section 19. Is it not true that the only difference between the people affected by section 16 and section 19, whether they are on the one hand ordinary farmers with some other activities, or whether they are in the Minister's book massive tax avoiders, either way they can have farms with £50 valuation or £100 upwards. The only difference is the difference in their valuation. Is that not true? If so should not the same situation apply to those in section 16 as to those in section 19?

Mr. R. Ryan

I will have a look at it and see what can be done about it.

Amendment agreed to.

Mr. R. Ryan

I move amendment No. 11:

In page 11, line 4, to delete "the tax chargeable in any case" and to substitute ", in a case where there is no income chargeable to tax other than profits or gains from farming, the tax chargeable".

Amendment agreed to.

Mr. R. Ryan

I move amendment No. 12:

In page 11, to add the following subsections:

"(2) For the purposes of this section, the tax appropriate to the profits or gains from farming shall, in relation to an individual, be so much of the tax that would, but for the provisions of this section, be payable in respect of the individual's total income as bears to that tax the same proportion as the amount of the profits or gains from farming included in the said total income bears to that total income.

(3) This section shall not apply in any case where the rateable valuation of the farm land occupied by an individual at any time during the year of assessment exceeds £119."

Amendment agreed to.

Section 19, as amended, agreed to.

SECTION 20.

Mr. Colley

I move amendment No. 13:

In subsection (1), page 11, line 15, to delete "six" and to substitute "nine".

The object of this amendment is to enable farmers who are offered under this section the option of being taxed either on last year's figures or this year's figures to exercise that option nine months after the commencement of the income tax year instead of six months as provided in the section. The reasons for this are, first, that people who will be affected have not been affected heretofore by income tax. They will not be very familiar with the procedures which will arise. Secondly, by the time this Bill is passed, published and people concerned have an opportunity of having their attention drawn to it there will be very little time left if the six months period stays as it is. At this time of the year until the harvest is in farmers do not have time to sit down, look after forms and work out accounts and so on. It seems to me that since this is a once-for-all, I assume, option exercisable only this year, it would be desirable to extend the period to nine months. It would effectively give farmers until a date early in January, I think January 5th, to exercise the option. The Minister indicated on the Second Stage that he might be prepared to consider something on these lines. I trust he will find it possible to do so.

Mr. R. Ryan

I recall that at the time of the budget I was faulted because I would not give what the Opposition considered a satisfactory answer on the question as to what people might be expected to obtain from taxation of farming profits. I explained it would not be possible to give an accurate figure until the assessments were made and the result was known and that it would take some time to make a more accurate assessment. That was on the basis of my difficulties on the basis of a six months' option being exercised by farmers. Now I am asked to extend the period for nine months which would mean that, if accepted, farmers would be free to exercise this option up to 6th January, 1975. That would be far beyond what was originally intended and far beyond any period given to any other taxpayers. With the exception of the transitional provision in relation to mining taxation, no other taxpayer enjoys an option of this kind to choose the form of assessment of taxation. Farmers would be put in a very privileged position. If farmers kept accounts last year, they know they kept accounts and they are in a position to exercise an option. If they are keeping accounts this year they will certainly know by August that they are keeping accounts this year. If this year's accounts are to have any validity at all they must certainly be kept at the moment. Consequently they will be able to make a decision by August. This right to elect is not being furnished in order that the person may choose which of the three options will give him the lowest liability to tax. The choice has been given so that he may choose the means most available for the purpose of paying tax.

The period which has been given is an extremely generous one. If the option were to be left open until 6th January, 1975, the inspector of taxes could not make an assessment. Under general law the inspector would be entitled to require a farmer to complete a return showing the profits from his farming on the preceding year's basis. Such returns will be issued by the inspectors to farmers as soon as this Finance Bill is passed so as to enable them, as they do in relation to other taxpayers, to make an assessment shortly thereafter.

If farmers were to be allowed to exercise an option of proceeding on the current year basis instead of the preceding year up to 6th January, 1975, they could inform the inspectors in August, 1974 that they had not made up their minds which basis of assessment they would be adopting and the inspectors would then be in the difficulty that they could not insist on completion of the returns showing 1973 profits if in fact these were not to be used for the purpose of assessment.

The result of this amendment therefore would be to suspend action in relation to the assessment of farm profits until January, 1975. There is no logical reason why this should be done. It would be contrary to the treatment to which all other taxpayers have to submit and I think we should therefore stick to the period of six months as originally proposed. Might I remind the House of the good German saying that a bad end is better than no end at all. When farmers have completed their forms and made their returns they will find in many cases good news: that they will not be liable to tax or that their liability will be a lot less than the Members of the Opposition or members of organisations—I dare not name them, they are so sensitive—might have already suggested.

Mr. G. Collins

From what the Minister said it is apparent that he is not going to accept what we consider to be a very reasonable amendment. We consider that the period of six months is too short, because there are already three months or three-and-a half months of this particular period gone and there are only two-and-a-half months left. It is not easy for those coming into the tax net for the first time to be ready to deal with the Revenue Commissioners. Cattle prices were never so unpredictable as they are now and also accounts of contractors and millers for seeds, fertilisers and so on traditionally are not settled until the harvest, which is usually well into October. We ask the Minister to accept this amendment because, as I said, this being the first time these people have been brought into the tax net, the procedure is going to be new to them. The Minister should accept our amendment therefore so as to facilitate those who are going to be caught.

Mr. Crinion

We should suspend it for nine months. Much of the year has gone and farmers were hoping that, through representations from their organisations, they would not have to pay tax. When this Bill passes through the Seanad and is law they will have to consult auditors. Auditors work very slowly, particularly with new clients, and it would take some time to give a farmer a decision whether he should opt for audited accounts. At that time of the year farmers are particularly busy and they do not want to be bothered with accounts. It is more important for them to gather in their harvest and to secure food for the coming winter. It would not be much good if they neglected their harvest in order to deal with their accounts and to consult an auditor. The Minister for Finance would not be able to supply them with feeding stuff the next winter. At the present time farmers are extremely busy with haymaking, with silage, with the harvest. This will continue well into October. They may be engaged getting out cattle during October and November. This would leave them only a few days in which to prepare their accounts and to consult an auditor. It would be well into November-December before they could do anything.

Because of these circumstances the Minister should extend the period to nine months to give farmers a chance to deal with their accounts. If the Minister were involved himself in farming he would readily agree with this amendment. As he has no experience of farming I see the reason he put down this amendment; but if he were a farmer he would say that the period should be nine months. At this time of the year the farmer has no time for preparing books. If the Minister consults some of his farming colleagues he will find what I say is perfectly true and it would be a gesture on his part to change it from six months to nine months.

Mr. Esmonde

I fully understand the difficulties that the Minister has in relation to the time limit but I would ask the Minister to have some understanding that the six months as mentioned here for election should not be called what lawyers would term "of the essence", and Deputy Colley and Deputy Haughey will understand what I am dealing with when I use those words. It is necessary, in the position of the Minister and the Revenue Commissioners, to fix the time of six months. The reason I suggest this course to the Minister is that the farmer has to assess what his position was last year and what his position is likely to be this year. He has to do two years' accounts before he can really exercise his election. To take nine months would be far too long and would cause complications and difficulties.

Mr. Meaney

I am very much in favour of nine months also. Farmers got the option of one year above another. The Minister knows well that this year is the year the farmers will opt for. If the Minister curtails him to the six months' option, he is going to cut him short. Does the Minister realise that the nine months ending on 6th January will include almost every form of farming? Six months would not give a true picture. Does the Minister realise that all ACC repayments are due on two gale days—1st May and 1st November? This should be included in any assessment made by the farmer. Take the example of a man who is on the calf suckling scheme. He will not have his cattle inspected until October and his grants will not be paid until about Christmas. He would have to get until 6th January to know where he stood. The point is that the cattle within the six-month period will not even be inspected. Take the grain farmers. Our beet factories are open at all times until early February. Thus the grain man, the man who has roots and who sells carrots and beet, he cannot assess his position until well into February. The Minister should think seriously about this and accept the nine months instead of six.

Mr. R. Ryan

In reply to what Deputy Esmonde had to say, the House can be assured that we shall not stick rigidly to 6th October. They have power—it is being exercised in a flexible way—to allow departure from these dates. But if we were to extend it to nine months, as suggested by the Opposition, it would in fact mean that there would be no collection of any tax from farming profits next January as there ought to be. It would also mean that in many cases there would be a collection of two years' tax until 1976, because the assessments would be so late in being made. Some farmers will go for the 40 multiplier——

Mr. Crinion

Very few this year.

Mr. R. Ryan

Is the Deputy prepared to bet?

Mr. Crinion

I am.

Mr. R. Ryan

I could tell the Deputy the counties where they would go for it in a big way, even in a year of losses.

(Interruptions.)

Mr. R. Ryan

I shall leave people to use their own devices to make their own calculations.

Mr. Crinion

I guarantee there will be more who will go for assessment than for 40 times the valuation.

Mr. R. Ryan

If they are so confident about that, now is the time for them to make it. There will be no difficulty. If they are so confident about the gloomy predictions, if they are good disciples of Fianna Fáil, they will be convinced that they are ruined this year and they will go for this year's accounts right away. They will not wait until next January when they discover to their cost that it is otherwise.

(Interruptions.)

Mr. R. Ryan

The extension to nine months would make a shambles of the whole system of taxation that we are proposing and would also be a disservice to the farming community. They either kept accounts last year or they did not. If they kept accounts last year they can decide to produce them. If they keep accounts this year they can decide to go on actual accounts for this year or they can go for the 40 multiplier. There will be no difficulty for anybody coming to a decision as to which particular method they will choose.

I want to emphasise what I said earlier. This option is being given not that people can decide which one is going to put them in the more advantageous position vis-á-vis the tax collector. It is being given as a facility because of the fact that in introducing a new form of tax farmers may not have kept accounts. That is the purpose of it. If they take other factors into account, that is their entitlement. Nobody can stop anybody reasoning what might be to his own advantage. But there is no justification for extending this into next year. Sufficient advantage has been given by giving three options. No other taxpayer will enjoy the same advantage.

Mr. J. Gibbons

I want to put this to the Minister. The Minister must know as well as every other Deputy that there are more farmers who do not keep accounts than those who do. When the Minister suggests that he is offering the farmers a choice, he must know that he is doing nothing of the kind. Most farmers will lose heavily this year because of the quite exceptional ineptitude of the Government. There are other reasons also, but the ineptitude of the present Government is the contributory fact.

Unless farmers had been keeping accounts last year and during the current year, they will not have this option open to them. In spite of the fact that they will be losing heavily on their farming operations, they will be assessed perforce on a calculation based on their valuation. In my opinion, this is a very shabby trick indeed. There is no real choice at all being offered by the Minister to the great majority of farmers. They are going to be forced to pay an income tax although they do not have an income. This is the plain fact of the matter. The Minister cannot deny that this is so. I want to invite him to say that it is not so: first of all, that there is no real choice for the great majority of taxable farmers, because they do not keep the type of accounts that would be acceptable to the Revenue Commissioners. That is one part of the choice gone. The other is that, in spite of the fact that a great many—most of them—will have a very, very serious loss in the current year, they will still have to pay income tax on an income they never had.

Mr. Carter

Deputy Gibbons is perfectly correct. It is the developing group of farmers you are going to come down on here. This year, when those developing farmers cannot come by credit, when the banks have clamped down on them and when they are being pressed by the banks to liquidate their overdrafts and when other institutions are bearing down on them, it is mean, to say the least of it. This applies, as has been said, to a section who up to now, had never kept accounts. The Minister is baulking at a difference of a few months. The amendment is not asking for very much. I should like to emphasise in this particular year—one of the worst facing farmers—that the profit returns will not be there, nor will the incentive be there to invest further, nor will the credit facilities be there. It is in this year that the Minister says they are going to leave them to the tender mercies of the Revenue Commissioners. We know the sort of mercy that will be dispensed by the Revenue Commissioners to this section of the community.

Mr. Colley

Would you put the amendment, Sir?

Question put: "That the words proposed to be deleted stand."

The Committee divided: Tá, 57; Níl, 52.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Cosgrave, Liam.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Dunne, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Kavanagh, Liam.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Donnell, Tom.
• O'Leary, Michael.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Taylor, Frank.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Brady, Philip A.
• Brennan, Joseph.
• Briscoe, Ben.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• de Valera, Vivion.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzpatrick, Tom (Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael F.
• Lemass, Noel T.
• Leonard, James.
• Loughnane, William.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Nolan, Thomas.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Sheridan, Joseph.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Browne and Healy.

Question declared carried.

Amendment declared lost.

Section 20 agreed to.

SECTION 21.

Mr. Colley

I move amendment No. 14.

In subsection (1), page 11, line 25, to delete ", other than an individual to whom section 16 applies,".

The object of this amendment is to give every farmer who becomes liable to income tax in the first year—I repeat only in the first year—the option of using the notional basis of assessment. Many farmers have not been keeping accounts. It is necessary to provide a transitional period. The Minister referred on Second Stage to the necessity for a transitional period in relation to this section. When I asked him why it stated that it was for the year of assessment 1974-75 only, he indicated that although that was stated in the section, it was intended to have a transitional period which he did not think would in any circumstances end after one year. The Minister announced, I believe, that one should accept this amendment. The only difference between the amendment and the Minister's proposals is that it will apply the notional basis of assessment at the option of the farmer taxpayer, but only for the first year.

Mr. R. Ryan

The purpose of the two amendments seems to make the notional basis of assessment available to a farmer who is carrying a trade or profession but whose farming profits do not exceed half of his total income——

Mr. Colley

No.

Mr. R. Ryan

What are we on?

Mr. Colley

Fourteen.

Mr. R. Ryan

I understood another amendment was related to this.

Mr. Colley

No. This is to delete from section 21, on line 25, page 11, the words "other than an individual to whom section 16 applies."

Mr. Haughey

It is the same point as we had before. Why are you excluding the section 16 people?

Mr. Colley

Yes.

Mr. R. Ryan

I will give the Deputy a good reason. I am right. You want to provide that the notional income may apply to somebody to whom section 16 applies.

Mr. Colley

Yes.

Mr. R. Ryan

I shall give a very good reason why it should not apply. Section 16 provides that where a person who has a farm and who also has some other trade or business is to be charged tax on his farming profits, he is to be charged tax on an account basis. The option of a notional basis should not be available to him. I will give an example. Suppose you take a person who shows a profit of just over £2,000 on his non-farming business while claiming that his farming activities produce a profit of £8,000. Under the amendments he would claim that 80 per cent of his income was derived from farming and he is entitled to the benefit of the notional basis of assessment although, in truth, these figures might be fabricated figures. His farming profit might be £2,000 and his profit from his non-farming business might be £8,000. Under section 16 as it stands, this man would be charged tax on his total funds of over £10,000 from both farm and business. If, however, these amendments were accepted he could opt for a notional basis in relation to his farming profits. After deductions for depreciation, cost of labour and so on, this might reduce the figure to well below £3,000. He would then be charged on a total figure of £5,000, notwithstanding the fact that his total profits are £20,000. In other words, to allow the notional basis here would simply be to promote further avoidance. The person who has an actual profit of £10,000 would end up paying tax on a notional profit of only £5,000. That would be contrary to the spirit of the section that the House has already passed.

Mr. Haughey

With all due respect, the argument put up by the Minister is absolutely ludicrous. He is just taking figures out of the air. We are concerned here with the different provision which the Minister is making for two separate groups of people. In the case of the farmers who have £100 valuation or more in this particular year the Minister is going to give him the option of taking a notional assessment. They are the bigger farmers, they are the people who are likely to have the higher income and they are the people likely to gain more from opting for the notional assessment basis. The Minister is going to give them the option of to the people between £50 and £100 whom he is bringing in who would be farmers with smaller incomes who would gain less from adopting the notional basis. It is completely illogical and unfair. I think the Minister has no option but to accept this amendment. These people in the range of valuation between £50 and £100 are small farmers. They are being brought into this net now for the first time. Surely if the larger farmer over £100 valuation can get this concession in the first year—that is all we are talking about here at the moment— the smaller farmer within the £50 to £100 range should be equally entitled to it.

Mr. R. Ryan

As I have said, this is an anti-avoidance measure, and it would be intolerable if we were to make a notional figure available to people who have——

Mr. Colley

The Minister is misleading himself. Does he not realise that you could have the kind of case that he described applying where the valuation was £101? The Minister is providing in this section that such a person who, according to him, is doing a massive tax-avoidance operation, could opt for the national basis under section 21. Does he realise that?

Mr. Haughey

In effect, what the Minister is saying, and the argument he is relying on is, that every farmer who has a valuation between £50 and £100 and who has any other income from any other source is a crook.

Mr. R. Ryan

No, it is not.

Mr. Haughey

He is saying that he cannot grant this because section 16 is an anti-avoidance measure and it would not be right to give this concession to people who are avoiding tax. In other words, everybody to whom section 16 applies is a crook in the Minister's mind. He is going to be evading tax.

Mr. Colley

But if he is over £100 it is all right.

Mr. Haughey

The provision of £50 to £100 may have some element of anti-avoidance provision in it, but by and large it is going to apply to a large number of straightforward, honest, decent farmers who are not avoiding, have not avoided and will not be avoiding tax. There is absolutely no reason why you should not extend this concession to them except sheer prejudice or else a complete misunderstanding of what is involved.

Mr. G. Collins

We have already demonstrated that we are, indeed, very displeased with the Minister in relation to section 16. We are not at all, as the Minister would like to say that we are, helping or wanting to help those who are avoiding taxes. What we do say is that there are many ordinary farmers with valuations on their farms between £50 and £100 who should in all honesty and fairness be given this option. It seéms to me that, apart from anything else, from the way the section is framed there is an anomaly in respect of the farmer in the £50 to £100 valuation category.

Mr. R. Ryan

As I explained on the Second Stage of the Bill, this section is to a large extent an anti-avoidance measure to bring to an end some of the most appalling scandals which have arisen by reason of the fact that farmers exempt from tax and some people engaged in other businesses or professions have set off profits from the trade or profession against farming profits in order to avoid paying a fair share of tax. I instanced cases like that of a veterinary surgeon who claims to be earning less than £1,500 in his veterinary practice and yet claims——

Mr. Haughey

It seems to me, a Cheann Comhairle, that the Minister has embarked on a discussion on section 16 as such. May I ask for a ruling as to whether the Minister should confine himself to the amendments?

Mr. R. Ryan

Sir, with respect, I am on the amendments, and if I will be extended the courtesy which I have extended to others of proceeding without interruption I will show the Deputy how relevant my remarks are. I used the case of a veterinary surgeon who claims to be earning less than £1,500 in his profession— and he must be a very rare person— and who claims, nevertheless, to be earning something in the region of £45,000 on his farm, the dentist who claims to be earning from his profession something around the £4,000 mark and twice that amount from his farming profits, or the doctor who claims to be earning from his medical practice £2,500 and in excess of £10,000 in farming profits——

Mr. Haughey

All those will be assessed under Schedule D.

Mr. R. Ryan

All those are cases which show the absolute necessity to bring shameful practices like that to an end. Why should such people who are making enormous profits from their trade or profession use a device to set them off against farming profits and thereby escape profit tax liability on their true incomes?

Deputy Haughey is interpreting the word "profession" in an non-tax way. He is regarding any person who obtains a professional qualification as a person who would be caught by our section. Of course, that is not so. If an accountant, a solicitor, or doctor happens to be the employee of another, then that person will pay tax under Schedule E and not Schedule D. A trade or profession for tax purposes refers to a sole trader, to a person who is self-employed, to a person who is selling his or her skills directly, and there is no need to add the words "assessable under case 2 of Schedule D." That is why it is unnecessary to use the words that Deputy Haughey mentioned. Furthermore, there is a very good reason why we should not do it, because there is at least one profession which occurs to me which is not assessable under case 2 of Schedule D because it is an exempt profession, that is the profession or activity of a writer, of an author or an artist. That person is exempt under case 2 of Schedule D. Now if the author's earnings from his profession are exempted from tax, then he could get exemption also in respect of his farming profits and it would seem to me that there are many people who envy our authors and artists the exemption which they enjoy and, indeed, Ministers for Finance are under a considerable amount of pressure to remove this exemption which is the cause of annoyance to people who do not enjoy it. I consider it would be very wrong, indeed if, in addition, to those people enjoying an exemption of this kind, they were, by reason of Deputy Haughey's amendment, also to get exemption in respect of their profits from farming, an exemption which would not be made available to any other person in the community.

We would have to consider this matter in the light of the way I have approached it, and not risk any further loopholes than are absolutely necessary. What we have done is to close the loopholes and to ensure that the proper tax is paid by people who are lucky enough to have a professional skill or a business outside their farm interests. Many of the people who have businesses or trades outside their farm are people who have inherited it. It would be totally wrong, it seems to me, that such people should enjoy the exemption when they have two sources of income. We want to close that off and the language which we have used is language that is well established in the income tax Acts and is not open to any ambiguity.

Mr. Haughey

If a person is employed in a profession for a salary or a wage, he does not come within the ambit of these two paragraphs, and therefore——

Mr. R. Ryan

In respect of his farming profits he will not but, of course, he will pay income tax on his wage or salary.

Question put: "That the words proposed to be deleted stand."

The Committee divided: Tá, 57; Níl, 52.

Tá

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Cosgrave, Liam.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Dunne, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom (Cavan).
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Kavanagh, Liam.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• Malone, Patrick.
• Murphy, Michael P.
• O'Brien, Fergus.
• O'Donnell, Tom.
• O'Leary, Michael.
• O'Sullivan, John L.
• Pattison, Seamus.
• Reynolds, Patrick J.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Thornley, David.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Níl

• Allen, Lorcan.
• Andrews, David.
• Brady, Philip A.
• Brennan, Joseph.
• Briscoe, Ben.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Collins, Gerard.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• de Valera, Vivion.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzpatrick, Tom (Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael F.
• Lemass, Noel T.
• Leonard, James.
• Loughnane, William.
• Lynch, Jack.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Nolan, Thomas.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Sheridan, Joseph.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.

Tellers: Tá, Deputies Kelly and B. Desmond; Níl, Deputies Browne and Healy.

Question declared carried.

Amendment declared lost.

Mr. Colley

I move amendment No. 15:

In page 11, between lines 33 and 34, to insert a new subsection as follows:—

"(2) For the purposes of subsection (1), section 16 shall be deemed not to apply for any year of assessment in a case where farming is carried on in that year of assessment by an individual whose total profits or gains from farming exceed one-half of his total income from all sources in that year of assessment."

Although there is a relationship to amendment No. 14 there is another point in relation to amendment No. 15, and I should like to make a case for it. There is a similarity of principles to amendment No. 14. What is sought to be achieved here is to provide that where a farmer has a non-farming income as well as a farming income that if his farming income is more than half of his total income he would be allowed to operate the notional basis of assessment provided for in section 21. I do not want to go back over all the matters that we mentioned already but I should like to point out again that under the Bill as it stands the position is that there is discrimination against a farmer who has some trade in addition to farming.

I did instance the case where one could have a man with a valuation a little over £50 earning £100 a year from some outside activity and, as a consequence, being obliged to pay income tax on his farming profits based on an accounts system. On the other hand, one could have a company director holding up to 25 per cent of the shares in a large company and he could still benefit from the £100 rateable valuation limit mentioned in section 15, subsection (3), so that he paid no tax on his farming profits or, if his rateable valuation exceeded £100, he could get the benefit of this notional basis of assessment.

The Minister has talked many times and at some length about achieving equity in the tax system. He cannot in all conscience suggest to us that that situation is equitable; if ever one wanted an example of something that was most inequitable this is it. The inequity cannot be remedied by this amendment but the amendment would go some of the way towards remedying the inequity by allowing the notional basis of assessment where more than half of the income comes from farming. If the Minister wants to tell me that it is not possible to establish that more than half the income comes from farming, I do not accept that that is so. I am satisfied the Revenue Commissioners will have enough power on the passage of this Bill to ascertain whether that is true or false. The Bill will also enable the Revenue Commissioners to get accounts from cases in which they are doubtful even if the net result is that the person can operate the notional basis. In order to establish his right to do it under this amendment he, possibly in many cases, would have to produce accounts. That, presumably, is what the Minister is trying to establish.

I hope, therefore, the Minister will find himself able to accept this amendment.

Mr. R. Ryan

Where anybody is engaged in a trade or profession outside farming the notional basis will not be available whether he is between £50 and £100 valuation or above £100. That is the effect of section 21 (1) of the Bill. There is no question, as has been alleged here, of giving privileged treatment to the better off who have properties in excess of £100 valuation, by allowing a notional basis to them even though they have an outside occupation while denying it to others. Section 21 reads thus:

Where for the year of assessment 1974-75, an individual, other than an individual to whom section 16 applies,...

Section 16 removes the limit, the concession and the exemption granted by section 15 (3) which is the one that says that the liability to tax is not to apply under £100. We have, in fact, trimmed this thing in such a way that a person who has an income outside of farming will not be entitled to the notional basis. The notional basis is available to the genuine farmer who has no other occupation or source of income.

Mr. Haughey

Is the Minister saying that the person who has a valuation of over £100 and an income outside his farm will not be entitled to have the notional basis of assessment?

Mr. R. Ryan

That is right.

Mr. Haughey

Where is that so?

Mr. R. Ryan

That is the effect of section 21 (1). Section 16 provides that section 15 (3) shall not have effect if the person has another trade or business, or his spouse has, and so on. So the different treatment which it is alleged these people are getting does not arise once they get the same treatment if there is an outside source of income. We are providing protection and certain concessions for the genuine farmer, the person who is not involved in a mixture of activities. The genuine farmer will get this notional assessment if he wants to use it. Nobody could go for the 40 multiplier this year because it represents far more than what their actual earnings would be and yet we are told at this stage that we are doing an injustice to people by not making that multiplier available. I suppose on all sides of the House at any time people will contradict themselves in the arguments they produce in relation to different sections but there is this contradiction. I am sure Members of the Opposition realise that they have contradicted themselves.

Mr. Colley

There is no contradiction in giving an option to people. The only contradiction that arises is in giving it to one group and not to another and this is what we are trying to deal with.

Mr. R. Ryan

We are giving the option to the genuine farmer who has not another occupation, trade or profession and not to anybody, no matter what the size of the farm, who has another occupation, trade, or profession.

Mr. Colley

That is what the Minister says he wants to do but does the Minister accept that under the provisions of section 16 a farmer with a valuation of £51 who earns, by a small bit of contracting or free-lance work of some kind outside farming, say, £150 to £200 in a year, that that person is not a genuine farmer? The Minister cannot surely say that.

Mr. G. Collins

This is what he has said.

Mr. Colley

If he is a genuine farmer, why should he not be entitled to the same treatment as the Minister is giving to what he calls genuine farmers?

Mr. R. Ryan

Perhaps the phrase genuine farmer is too limited. I am talking of what one might call the full-time farmer.

Mr. Colley

The person I have described can only be regarded as a full-time farmer.

Mr. J. O'Leary

Could the Minister explain why he is multiplying the rateable valuation of the farm land for the year of assessment by 40, whereas under the Social Welfare Acts the rateable valuation is multiplied by 20? Could the Minister explain the big difference? Whereas for taxation purposes the rateable valuation is multiplied by 40 for Social Welfare purposes the rateable valuation is multiplied by 20.

Mr. G. Collins

Maybe he is going by a multiplier of 40 also for Social Welfare purposes.

Mr. R. Ryan

The Social Welfare figure is purely an historical figure which has a bearing on the current income from farming activities. If one were to take what is recognised by the various institutions as contributed towards——

Mr. G. Collins

Would the Minister describe the valuation system as an historical system?

Mr. R. Ryan

It is and I am not saying it is a fair system. I have criticised it on numerous occasions.

Mr. G. Collins

And yet the Minister is getting a lot of tax on that particular system.

Mr. R. Ryan

In common with anybody else who has done any research into this, including the various commissions on income tax, I say that it is the best available system. It is eight years ago since a commission on income taxation, appointed by the Deputy's Government, recommended that we revise all valuations and that commission said it would take 11 years to do it. Had that recommendation been implemented we would be eight-elevenths towards achieving the ideal.

Mr. G. Collins

When will the Minister introduce a system better than the valuation system for the purpose of taxing farmers?

Mr. R. Ryan

We are arriving at a transitional arrangement so that the various problems can be studied to consider what would be the best alternative to the system.

Mr. G. Collins

Would the Minister not have been better off to have left it alone for another year?

Mr. R. Ryan

There is nobody on my back, I am glad to say.

Mr. G. Collins

The Members of the Labour Party, and they are not even here. None of them was here during the day or tonight.

(Interruptions.)

Acting Chairman (Mr. Governey)

Order, please; back to amendment No. 15.

Mr. R. Ryan

For those who say that there is someone on my back I should like to say that such a person would have difficulty in getting there or staying there. We are providing here a system which will ensure that any person who has an income outside farming will not enjoy this notional valuation. Most of the valuations are on farms owned by people who have not any other source of income. Others are in a position to render actual accounts and it is on that basis that they will be taxed.

Mr. J. Gibbons

I should like to raise a number of points with the Minister. One is that a farmer who in the beginning is a full-time farmer with no other occupation is deterred very effectively by this section from taking up other employment by which he might otherwise enhance his income. Therefore, a farmer who gets an offer of a part-time job that would be of assistance to him in the development of his farm will be prevented by section 21 from accepting it because he will be penalised for doing so. In the event, he will probably find it not profitable to take any extra agricultural employment of any kind. He is having a condition of semi-bondage put on him. He will not be allowed by this section to expand his operations beyond farming and if he tries to do so he will be heavily penalised under this section.

Mr. R. Ryan

That is not so.

Mr. J. Gibbons

If I am wrong, I would be glad if the Minister would tell me where I am wrong.

There is another point I want to mention to the Minister and it is the question of farmers who decide, for instance, to stand for election to this House. Would such farmers, if they were successful in being elected, be deprived of the option of the notional method of assessment or would they be constrained to pay their income tax on the basis of accounts, whether such accounts exist or not? I appreciate that a person of the Minister's lightweight, flippant attitude could regard this as a matter of amusement but I can assure the Minister that it is not a matter of amusement to the farmers.

Mr. R. Ryan

I was not regarding it as a matter of amusement and I do not see why the Deputy would think that.

Mr. J. Gibbons

Would the Minister answer the question?

Mr. R. Ryan

If the Deputy wants to pass comments about my demeanour or disposition he cannot resent my explaining it.

To deal with the Deputy's specific questions. In the first case, I said he was wrong because if a person takes up employment he will not lose this advantage of the notional income. It is only a person who engages in a trade or profession, as a sole operator, or in partnership with somebody else, not as an employee who loses the concession. The question of a person wanting to supplement his income by going to work in a factory does not arise; there is no disadvantage arising from that.

So far as the second case is concerned, that is the case of a person who becomes a Member of this House, that is not, God knows, a question of being the sole trader or of being in one's own employment: one is sent here as a Teachta Dála; a messenger of the people; one is——

Mr. Colley

Not a messenger: there is a very important distinction.

Mr. R. Ryan

Is cuma liom. I do not see that there is anything lacking in status or importance as far as a messenger is concerned. The Members here represent the people and are in receipt of an emolument from the State as an allowance because of that representation. It seems to me that that is more within the nature of the employment which would not deprive a Member of this notional income rather than in the nature of being a sole trader. Members are not a sole trader because while they may maintain a certain independence and I would trust they do, nonetheless, they are in a semi-contractual relationship with the electors and the State.

Amendment put and declared lost.

Question proposed: "That section 21 stand part of the Bill".

Mr. Crinion

Section 21 sets out the deductions that may be made by way of expenses. It waives deductions in respect of plant and machinery. In subsection (4):

... no deduction shall be allowed other than those specified...

Section 496 of the Income Tax Act, 1967, permitted a claim for repayment of income tax in respect of bank interest paid. This has now been amended in section 29 of the Finance Act, 1974.

Section 21 (4) of this Finance Act should be amended to make it clear that it does not rule out a claim for bank interest relief. At present this matter is rather obscure. I should like to know what the Minister has to say on this.

Mr. R. Ryan

The situation here is that this notional provision assesses the profits from a farming activity. We say that in relation to the assessment of the profits they use the 40 multiplier and then deduct these claims and that assesses what is the income from the farming activity.

Beyond that, a taxpayer may be entitled to certain other deductions: personal allowance, married allowance, children's allowance—they have interest allowance as well. The fact that we do not allow those items in relation to the forty is simply because the forty is an assessment of the farm's income—it is a purely notional assessment, but it does not rule out the application of all the other allowances to which any ordinary taxpayer may be entitled. A taxpayer is entitled to certain allowances irrespective of whether or not he or she has an income from a business, or from particular employment, or from dividends. The ordinary personal allowance to which a taxpayer is entitled in his personal capacity can, of course, be deducted after one has achieved the net figure assessed for the farm income.

Mr. Crinion

The Minister mentioned deductions of plant and machinery and did not mention bank interest. This is a particular relief that will be claimed by a number of people. When the Minister mentioned that it is in the 1967 Act, I think it should be mentioned in this Bill as well. It would make things much more clear if an amendment were put down on Report Stage to deduct bank interest.

Mr. Haughey

I do not know if I would go along with Deputy Crinion in regard to bank interest. The section, as it is framed, is somewhat anomalous even with regard to machinery. The Minister is allowing a deduction in respect of the wear and tear of plant and machinery, but he is not allowing the running costs of the machinery. That seems to me to be talking illogically. If machinery is to be allowed, surely the actual cost of running the machinery is just as important as the wear and tear. There is also an anomaly in regard to the people employed. The section proposes that a deduction will be allowed in respect of wages paid to employees. It specifies that the wages must be paid in cash. Anybody who knows anything about rural Ireland knows that very often wages are, to a considerable extent, paid in kind. It is quite anomalous to allow a proportion of remuneration which is payable in cash, and not to allow in many cases a substantial amount of remuneration which is paid in kind. They are two particular criticisms I have of the way in which the notional assessment system will be applied.

In regard to this section I should also like to mention the Minister's apparent phobia about farmers who have income in addition to their farming. There appears to be a total blind spot about that type of farmer. In my view, he differentiates in this regard between farmers of between £50 and £100 valuation and farmers of over £100 valuation.

Section 16 applies only to farmers between the £50 and £100 valuation. That would be my reading of it. Therefore, to that extent these particular farmers—those in the £50 to £100 valuation range—are penalised, whereas farmers who have a valuation of over £100, and have off-farm income, are not subject to the same disadvantages. The Minister disagrees with that interpretation. As I understand him now, he says that section 16 applies to all farmers, whether they are under £100 or over £100, if they have income from non-farm sources. In one way or another, he is quite definite. His whole approach to these sections is that where a farmer has income other than farm income he is not a genuine farmer, he is a person who is suspect a man who has to be penalised. That, frankly, is thinking I cannot understand. Surely, everybody in this House would regard it as desirable that farmers at all levels would use whatever enterprise and initiative God gave them to improve their lot in any way they can, through their own efforts or through the efforts of their wives. Surely, it is a good thing that farmers, as Deputy Gibbons said, should be encouraged to find non-farm income. This is particularly so in these times when farming is proving a more uncertain occupation than it has been for a long, long time. Any sensible farmer, who has the opportunity to do so, would certainly be wise to cushion himself against the vicissitudes of farming by having some non-farm income, if he can possibly produce it.

The Minister is quite adamant that farmers who have any sort of non-farm Schedule E income must be penalised as if there was something venal about them, or something suspect, no matter who they are and, therefore, they must be subject to penalties. In this particular case they cannot be allowed to have access to this notional assessment provision. That, to me, is quite incomprehensible. It is a very serious criticism of the Minister's whole approach to this system. The Minister is making these provisions in advance. One would, perhaps, have some sympathy with him if we had taxation of farmers in existence for a number of years and certain abuses began to appear and the Minister had to make some provisions to close loopholes. But in actual fact he is bringing in these provisions in regard to farmers who have non-farm income in advance of the experience of the operation of the sections. I despair of getting any further change out of the Minister on this aspect but he is doing something which is unwise and anti-social, something which will have serious repercussions from the social point of view on life in rural Ireland.

Mr. R. Ryan

On the question of people who pay in kind, of course there will be a cash value put on any benefits be they accommodation, food and any other benefits which are other than cash benefits; the farmer will be entitled to set those off as an expense in the course of his business.

Mr. Haughey

Against the notional assessment?

Mr. R. Ryan

The cost of labour includes not merely the actual cash handed over but also benefits in kind. They are not ruled out. We have also made it clear that we have allowed as a proper deduction fees paid to a contractor for doing work on a farm which, in these days of scarcity of farm labour, is not necessarily cheap labour.

Mr. Haughey

Will the Minister look at the proviso to subsection (2)? It says: "Provided that for the purposes of subparagraph (i) emoluments payable to a person connected with the individual shall be taken into account only in so far as they are paid to that person in cash".

Mr. R. Ryan

That deals with a person who is called a connected individual, family, a child, for instance.

Mr. Haughey

That is what I am talking about—I meant to make that clear—one's family.

Mr. R. Ryan

That deals only with a child, or a wife, or some member of the family. It does not deal at all with a stranger who is in employment.

Mr. Haughey

The main bulk of farm employees is constituted of these people.

Mr. R. Ryan

There has to be a limit. On that basis, every taxpayer ought to get some allowance in respect of the domestic chores performed by his wife and the children at home because, if they were not there, he would have to engage a housemaid. It just is not attainable and we are now getting into the realm of the ridiculous. There has always been, as Deputy Haughey knows, a clear distinction between the services performed by employees and the services performed by one's own kith and kin. It would be quite impossible to try to get a subtle differentiation between these two in the tax code and to measure what was a service of a commercial nature and what was a service of a natural family disposition.

On the issue of interest, I want to emphasise that the interest availability to a person operating the notional income is the same as is available to any person which will enable him to get interest up to an annual limit of £2,000. If the interest attained by a person in the course of farming business were to exceed £2,000 annually, then that person would be well advised to go for the actual accounts. If one's natural accounts were able to show that the money borrowed for farming purposes propounds an interest rate in excess of £2,000, he would get the allowance in excess of £2,000. As long as he goes for notional income for the purpose of calculating farm income it will be notional income less these deductions I have mentioned. That would take all allowances into account, including such interest allowances as might arise.

Mr. Colley

I do not want to prolong the discussion but could the Minister indicate in the section where it is provided that interest up to £2,000 may be deducted?

Mr. R. Ryan

It is not specifically referred to here because it is not necessary to refer to it. We are dealing here with the assessment of farming profits and we are providing a notional basis and allowing certain deductions from that for farm purposes. The farmer who is subject to income tax is entitled to the same entitlements as any other taxpayer. That includes, in relation to interest, a right to personal interest set off. If you want to put the interest on a business basis—no doubt they might do that if the interest liabilities are in excess of £2,000—they would then go for actual accounts. They cannot be denied legitimate entitlements under existing law.

Mr. Colley

Despite what it says in subsection (4)?

Mr. R. Ryan

Subsection (4) deals with the profits of the business and any allowances made after that will not be related to the profits of the business.

Mr. Haughey

According to the Minister, he will not have the notional assessment basis if he has any other income.

Mr. R. Ryan

The liability is a liability for interest.

Mr. Haughey

I should like to make one final point very briefly, in case it appears that the Minister thinks, or anybody here thinks that the Minister is doing wonders by providing this notional assessment basis. I want to tell the Minister of the experience of a farmer friend of mine. He is married with two children and his land is valued at £150.50. When he first heard about this notional valuation business he was very pleased, and said: "This is marvellous. I will not be paying any tax." Unfortunately, when he got down to doing his calculations—this is a perfectly ordinary, straightforward case—he found that the notional valuation basis would result in his paying an annual tax of £595.50 on a £150.50 valuation farm. This notional basis is not any great god-send.

Mr. R. Ryan

What were his actual outgoings? The Deputy has not told us that.

Mr. Haughey

He would pay £900 in rates and he would pay £595.50 in tax. He would have total outgoings in taxation of £1,495 in the year.

Mr. R. Ryan

What were his actual profits?

Mr. Haughey

None this year: a loss this year.

Mr. R. Ryan

Then he would ask to go for the notional value and not the actual accounts.

Mr. Haughey

He will not go for the Minister's notional basis because it is no good to him.

Mr. R. Ryan

If he will not go for notional value, he will go for actual accounts.

Mr. Haughey

I am making the point that the notional basis is really no use to anybody.

Mr. Esmonde

It is optional.

Mr. Haughey

What good is an optional basis to a man with £600 tax in a year with a farm valued at £150.50?

Mr. R. Ryan

Most taxpayers would love to get three choices.

Mr. MacSharry

Ninety-nine per cent of them have no choice except to pay up.

Mr. Haughey

I am just giving the Minister a simple, practical, concrete case of how his notional basis will work out in this case.

Mr. R. Ryan

The Deputy has not told us the actual profits, or as he says, losses of the farmer.

Question put and agreed to.

SECTION 22.

Acting Chairman (Mr. Pattison)

It is suggested that amendments Nos. 16, 17 and 18 be taken together. Is that agreed?

Mr. Haughey

Amendment No. 16 is completely different.

Acting Chairman

We will take amendment No. 16 then.

Mr. Colley

I move amendment No. 16:

In subsection (2), page 12, lines 30 and 31, to delete "one-tenth" and to substitute "one-fifth".

The object of this amendment is to ensure that the allowance for capital expenditure provided for in section 22 will be available on a depreciation over a five years basis instead of ten years as provided in the section. The reason for this is that in many aspects of farming the rate of technological obsolescence in the kinds of farm buildings that are required is extremely high and certainly a ten-year period is far too long in many aspects of farming. Five years would be closer to reality than ten years. It is for that reason, in order to bring the allowance more into line with the reality of the situation, certainly in a number of aspects of farming, that we propose this amendment to allow the depreciation over five years instead of ten years.

Mr. Crinion

I should like to support the amendment. There was a period when all buildings that went up were built in bricks, mortar, steel, galvanised iron or stone, but quite a number of modern buildings which house poultry et cetera are pre-fabricated and have a life expectancy of only ten years and, after a couple of years, there is quite an amount of repair work to be done. If you repair them you will get ten years out of them. When I was in Holland five or six weeks ago I observed farm buildings on the modern farms there; for cattle and cows timber structures are used. They are all short-life buildings. Anything built of timber needs repairing.

There is a firm in my constituency in Meath which erects prefabricated buildings for cattle. They are advertised in most newspapers. They are only short-life buildings. When thinking of the future, it would be more realistic to write such buildings off in five years instead of ten. If this Bill had been introduced ten or 20 years ago I would have agreed with the Minister on this point but, when you take modern farming, modern trends and the type of modern buildings being erected today into account, a figure of five years would be more realistic.

Mr. J. Gibbons

I, too, would like to support this amendment. I would like to point out that anybody with even a cursory knowledge of the housing required for the milking of cows should realise that the people who a few years ago installed what were then modern in-line milking facilities had to replace them in a very short number of years. That style of milking was superseded by the more modern type of milking parlour. A similar situation obtains in pig husbandry. The continuously developing methods of housing pigs have been going on very rapidly over the last 25 to 30 years.

There are eminently sensible grounds for accepting this amendment. The tendency is, as Deputy Crinion pointed out, in modern farm architecture to go for the purpose-built, rather short-lived type of structure rather than the splendidly built stone buildings that were inherited from the last century or possibly earlier. These splendid buildings are of very limited use and cannot be adapted. For that reason modern farming practice leans towards purpose-built modern buildings with not too much expensive durability built into them because farming, especially in transitional times such as these—ignoring, for the moment the present calamitous conditions—requires a certain flexibility. The EEC are actually offering incentive grants to people to get out of dairying. If they have solid, permanent dairy buildings, and they accept the FEOGA grants to get out of milk production, they will require possibly to build houses for beef cattle. They will get very poor consideration under section 22 of the Minister's Bill for so doing although the EEC are on the contrary subsidising farmers to get out of milk.

Mr. R. Ryan

I live in great hopes. We are now on section 22 and a new light is descending on the Chamber. There are, of course, a great number of buildings that can be erected. Some have a very short life span and, after last year's winter storms, many farmers were sorry they had not erected more durable buildings. Members opposite claim the Minister does not understand the problems involved. I myself erected buildings on my own premises with my own hands which, I am sure, will survive as long as myself and my children. They will serve many purposes, even agricultural ones.

Mr. G. Collins

Was it in the Minister's spare time?

Mr. R. Ryan

I find using my hands in manual work a great help to thinking properly.

Mr. G. Collins

In fairness, the Minister has been using his feet quite a lot side-stepping here over the past 24 hours.

Mr. R. Ryan

A change is as good as a holiday. Everyone knows that some buildings have a life span of only five years and some have a life span of 50 years. Some buildings, particularly those with a five-year life span, are more machines than buildings. We have been very fair here. We have provided a ten-year write-off period; it is comparable to what is available in other countries. I am quite prepared to give this undertaking: if, in the light of experience, there is concrete evidence that this is an unreasonably short period, I will be prepared to adjust it. If we find, on the contrary, that the period is too long, some amendment will have to be made.

Mr. Colley

That is unlikely.

Mr. R. Ryan

One does not know what the pattern of agriculture may be. A life span of from five years to 50 is a very good compromise.

Mr. Carter

In view of the aid in the EEC, I must say the Minister is taking a very stingy view in this section.

Mr. G. Collins

Accepting what the Minister has said, it would appear that he has a doubt in his mind that he is doing the right thing in insisting that a ten-year period be the period. He has said that many buildings have a life span of only five years. The farming organisations laid great stress on this particular point when they met the Minister's officials.

Mr. R. Ryan

And the Minister.

Mr. G. Collins

I am not sure if they got the opportunity of telling the Minister this. I think the Minister was doing his own thing at the time. He was not free to meet them, if I remember correctly what I read in the papers a week or so ago.

Mr. R. Ryan

That is not so. Does the Deputy know when the telegram arrived—5.25 on Friday?

Mr. G. Collins

With all due respect, when the Minister has had a little more experience in dealing with farming organisations, he will know that what happened at 5.25 last Friday evening was not the first time that particular tactic was employed. All former Ministers for Agriculture and Fisheries will be able to tell the Minister about letters and telegrams being sent on a Friday evening and the Minister would be able to learn of their contents from newspapers on the Saturday morning before the communications had even reached the Minister's office.

Mr. R. Ryan

I was in my office until 9.25 on Friday.

Mr. G. Collins

Which office? His constituency office? He was doing his own thing on Saturday morning. Would the Minister be prepared to consider an amendment for Report Stage, assuming we ever get to Report Stage——

Mr. R. Ryan

We have to finish by 9 a.m.

Mr. G. Collins

I understand that. But the Minister has officials with him who would be able to draft an amendment for him, with a compromise on this particular amendment of, say, seven years?

Mr. R. Ryan

I was going to start with 20 and I ended up with ten.

Mr. G. Collins

I put it to the Minister that, if he is prepared to table an amendment on Report Stage, that would meet the wishes of practically everyone engaged in the industry. It is not very much to ask for.

Amendment put and declared lost.

Acting Chairman

I take it, it is agreed to take amendments Nos. 17 and 18 together?

Mr. Colley

I move amendment No. 17:

In subsection (2), page 12, to delete lines 35 and 36.

The effect of this amendment is to allow claims for capital expenditure allowances as provided for in section 22 on farm buildings erected or farm works carried out before 6th August, 1974. These allowances provided for in section 22 represent the cost of using the building or getting the benefit of the particular improvement concerned over the lifetime of the assets in question. This should be allowed over that lifetime. The effect under the Bill, as it stands, would be that, if a farmer last year incurred capital expenditure on, say, new farm buildings he will lose nine-tenths of the allowance he should get because, according to the section, he will be utilising that building for another nine years. He will get no allowance, although he should get it. Because of the period behind this section, he will be utilising that building for another nine years but he will not get any allowance as the section stands. This is unreasonable. In cases such as that I think the allowance should be given dating from the period when the work was done. He would not get any allowance from April, 1974. In so far as the remaining years after April, 1974, are concerned he should get the allowance. This is a reasonable proposition. The contrary situation—the one provided in the section as it stands—is inequitable and does not do justice to farmers who expend money on this kind of construction and farm improvement works.

Mr. Crinion

I should like to support this amendment. In past years farmers have spent large amounts of money on construction work. This is particularly true of the year 1972. The Department of Agriculture and Fisheries have been advising farmers over the past ten years to get cattle off the land for the winter and to invest in new buildings. Perhaps the Minister would clarify a few points for me.

For example, a farmer erects a new building in January and pays for it in February; the grant from the Department does not arrive until July. At which period would the building be reckoned to be completed? Is it when the grant has been paid, when the building has been paid for or when the last nail is struck in the building? The Department of Local Government maintain it is when the grant is paid. I should like to know the position of a farmer who erected a building this spring and the grant is paid this month. When would it be reckoned the building was completed? Buildings erected in the past ten years should have a certain write-off value for income tax purposes. It has been said it is difficult to ascertain when the building is erected. That is not so. The Department of Agriculture and Fisheries have a record of when grants were paid and also of the cost of the building. The allowance may be granted from that period on.

Mr. Haughey

I support my colleague's approach to this matter. I also want to discuss amendment No. 18 which is a subsidiary to the principal amendment, No. 17.

The case has been made about the absolute necessity to allow these provisions in respect of expenditure on buildings which occurred before April of this year. Farmers have been encouraged to embark on expansion programmes involving a great deal of building of one sort or another either-in preparation for or subsequent to our entry into the EEC. A great deal of building has taken place prior to this year. It is totally unfair that farmers are not allowed any write-off of that expenditure on buildings unless it was undertaken before April of this year.

The reason for this is simply standard doctrinaire thinking. It is inappropriate in this particular case. There are strong revenue traditions that when an allowance of this nature is brought in the allowance is operative in regard to expenditure incurred after the provision is introduced. Here we have a very unusual situation. Farmers are moving from a tax-free position into a taxable position. It is quite legitimate and quite justifiable and necessary to make special provision to cope with that situation. This is not simply a question of providing a new allowance and making the normal provision apply to the new allowance, namely, that it is only applicable to expenditure incurred after it has been introduced. This is a totally different situation in the background here and that is the change in regard to taxation of the farming community as a whole.

My amendment has the effect of applying to expenditure on buildings the same provisions as the Minister is applying to expenditure on machinery. In regard to machinery, the Bill provides that even though the expenditure was incurred before April of this year, a notional writing down will be provided and the assets will be taken in to the income tax situation at a notional written down value at April of this year as if these provisions had applied from the date on which the machinery was purchased. That particular provision has been criticised by the farming organisations as being unfair, but I would be inclined to accept it as a reasonable compromise—that machinery which was purchased at any time before April 1974 should be treated as if wear and tear provisions were in operation and it arrived at April, 1974 with a written-down value. We then start at April, 1974 with that written-down value and allowances are given from then on based on that written-down value in the period of years involved. That is not ideal but it is a reasonable compromise. What I am suggesting is that the same should be done as regards expenditure on buildings where that expenditure was incurred before April, 1974. It is totally unfair that there should be no allowance from 1974 onwards in regard to capital expenditure on buildings.

My amendment, taken in conjunction with amendment No. 18, provides the same procedure as the Minister is providing in the case of machinery, namely, that buildings will be regarded as having been written down in the period prior to 1974, will come into the system at a notional written down value at April, 1974 and from then on will be written off each year in accordance with the notional scale. That is a fair compromise and I recommend it to the Minister and the House.

Mr. G. Collins

The Minister in his Second Stage speech said that in the interests of fair play the Bill contained a number of significant provisions. He enlarged on this in a number of places. He wanted us all to think that fair play was his prime motive in introducing this Finance Bill. In fairness to him, the idea was well sold. The public were given the same treatment by the propaganda from RTÉ, who are on the Minister's payroll. If the Minister wants the public to believe that he is acting in the interests of fair play, I think he should be only too willing to accept amendments Nos. 17 and 18 which are very fairly put. If the Minister thinks he is acting in the interests of fair play by excluding buildings—very costly buildings erected by many in the past three or four years—I feel the propaganda effort in trying to sell the fair play idea will have back-fired. The Minister has an obligation to accept these amendments. In doing so he would meet the wishes of everybody involved in agriculture.

Mr. R. Ryan

On all previous occasions when allowances were granted or extended or increased in respect of expenditure on construction of any buildings—one can think of market garden buildings, holiday camps, hotels, registered holiday accommodation—new allowances applied to expenditure incurred after the announcement of the commencement had been made. It would be completely contrary to the lines followed on all previous occasions to provide now for the first time that new allowances for expenditure on farm buildings should take into account the expenditure incurred in previous years and particularly when in those earlier years the expenditure was incurred at a time when farming was not subject to any tax liability and correspondingly not entitled to any tax relief.

I recall that Deputy Colley advocated a similar concession on the Finance (Taxation of Profits of Certain Mines) Bill. On that occasion Dáil Éireann considered it would not be appropriate to give that concession in respect of expenditure incurred before the liability for tax arose. In respect of Deputy Haughey's amendment, I should like to say that it follows on the lines of amendment No. 17, which seeks to secure that a notional allowance of 10 per cent would be deemed to have been granted for every year prior to 1974-75 in which the buildings had been in use. The Deputy proposes that the balance of expenditure in pre-1974 years would be available for write-off for 1974-75 and future years.

The Deputy adopted this pattern from the provisions relating to the granting of wear and tear allowances in respect of machinery and plant used in an activity which was at one time exempted from tax but was then brought into charge, for example, in the case of the mining industry and co-operative societies from which the general exemption was removed in 1963. What happens there is that the new legislation when it comes into charge to wear and tear allowances in respect of plant and machinery actually used in that activity, since they are entitled to wear and tear allowances in respect of this plant and machinery, the new legislation is confined to writing off notional allowances for the period during which the profits were exempt from tax.

This position is being applied under this legislation to plant and machinery used on farms. Section 25 contains the necessary provision. This practice does not apply when new allowances are being introduced for the first time such as in this section. These new allowances in respect of capital expenditure are always related to expenditure incurred from a current date. If the Deputy can show me any case in the past where these allowances have been treated retrospectively I will be very interested and will have another look at it. But I do not believe this has ever happened before in relation to capital allowances and I think it would be completely wrong to depart from that well established principle.

Mr. Blaney

The amendments in the names of Deputy Collins and Deputy Colley, whether taken singly or in conjunction are reasonable. Deputy Haughey's makes a great deal of sense regardless of what the Minister has just said, that he does not know of a precedent that could be applied. If it is precedent we are looking for, as has already been pointed out, there is no precedent for taxing farming profits up to now. Why then should we seek a precedent for reliefs or write-offs for allowances of this nature?

The least that could be expected in this case would be that the section should be amended, whether by virtue of amendment No. 17 or amendment No. 18 or perhaps by a suitably worded amendment by the Minister and his advisers, so that the value of the asset provided at whatsoever time in advance of 6th April as mentioned in the Bill at the moment, would be taken as the starting value, taken as if it were a new asset created since 6th April, and that the write-off should then take place in the manner prescribed in the section. In other words, whatever may be the value of the asset today, regardless of when it may have been created that this should be its written down or existing value.

If the Minister feels in this regard that there could be complications and that a great deal of work may be incurred for the people who administer the code, I would suggest to him a few ways in which the matter might be dealt with. One way which immediately occurs to me is that a certificate from a properly appointed and recognised valuer would be accepted with, perhaps, spot checks here and there to ensure at the outset that the Minister was not being deceived as far as values were concerned, if he had any fears in that regard. I would not have such fears. I feel that the asset as it came in on 6th April, regardless of when it was provided, should qualify for the write-off for the period prescribed in the Bill. In doing this the Minister would be creating no precedent that he or any of his successors as Minister would have to fear in that the possibility of new elements of the population being taxed for the first time in so far as their profits for an occupation are concerned is most unlikely in the future. I do not think there are too many of these around for this or any future Minister to grapple with. But even if there are, relatively only a small number of cases would arise.

Even if the suggestion in either of these two amendments or the amendment I suggest the Minister might consider seriously bringing in himself, were accepted, it would not be creating any difficulties for him in future, and even if such could arise and if any other elements can or will be taxed in the future for the first time, as is the case with farming profits in this Bill, it is only fair that whatever might be the asset which could be regarded as comparable to this particular asset can be dealt with in the future in like manner.

Leaving the future aside, I put to the Minister as strongly as possible the view that since he is going to bring these people into the tax net for the first time, and if by their diligence and their own sacrifice and hard work they have created assets in the form of buildings which have made their enterprises more tax-giving, it is only fair that they should be regarded in the light suggested by various speakers. I appeal to the Minister very strongly on this amendment that he should consider the idea of amending the section so as to give the benefit of the write-off in regard to any of those buildings at their present-day value. That value could readily and very satisfactorily be ascertained by the use of recognised valuers certifying the present-day value.

Another method could be taken into consideration by the Minister. That is the replacement value of the buildings as they now exist. That could be taken as a yardstick whereby the write-off could take place. But whichever of these methods the Minister might choose, I would again say to him not to have any fear of a precedent being created, not to be looking for precedents to justify taking this particular view, because we are dealing with the unprecedented in regard to this particular section. There has been no precedent in regard to the application of the tax to farming profits and, therefore, there is no need to seek out a precedent for providing exemptions or write-offs as suggested here by these two amendments. Perhaps the Minister and his advisers could bring in a more suitable and better method of doing the job that would incorporate either the replacement value or today's value, as it were, of the asset regardless of when it was created. These things would have been created in many cases by an amount of sacrifice by the present owners. It would not now be fair to penalise those who had been more progressive and more far-seeing in making their buildings as they now exist because the date in April of this year happens to beat them in so far as the creation of a building or other asset is concerned.

Mr. Crinion

The Minister has been referring to lack of precedent. The reason for this is that there was no way of checking back on buildings erected in the previous years, but in the case of farmers there is a record of their buildings from the grants they were paid for them. The inspectors who allocated those grants will have valued the buildings because the grants are usually on a percentage basis. I ask the Minister to consider this and to have an amendment to cover buildings that have been erected in the past few years and grant them relief from tax. I also request the Minister to give me a reply to a question I asked about buildings which were finished in February and the grants were paid in July. Do they qualify?

Mr. R. Ryan

The date that would apply would be the date they were inspected—when the expenditure was incurred. The question then arises of when it was incurred and does the date on which it became due matter. It is very difficult to say in a general way what the formula will be or what the result will be by the application of that particular formula to the series of events in relation to any one particular building. They do look at the case in which the liability to pay arose and that is regarded as the due date. You could, therefore, have a situation in which the building was in course of construction before the operative date of this Bill but the liability to pay would not have arisen until after it. It would then become within the period and it would flow from then to the exemptions thereafter.

I am sorry that I find myself unable to breach this well-established principle that where capital expenditure falls into the state of an activity which is not liable to tax it cannot be given a concession thereafter. The truth is that breaking of extensions occurred in the past at a time when liability to tax did not arise and the right to set off expenditure against tax did not arise either, so the question of the tax element did not enter into the reckoning of people when they made decisions to erect buildings. To change that well-established principle could have ramifications which could be, to say the least of it, extremely costly from every point of view. I think it is better to apply the same set of rules as far as one can to all sections of the community. No special case has been made here which would justify exceptional treatment which previously has not been extended to anybody else.

Mr. Carter

The Minister says that there is no precedent for earned relief or relief to be extended until liability arises. I would put to the Minister that there is equally no precedent for taxing farmers while at the same time asking them to pay rates on agricultural land.

(Interruptions.)

Mr. Blaney

Why is there the differentiation between plant or machinery or equipment? Why is there the impossibility of doing for buildings what one could do for plant and machinery? Perhaps the Minister might give us his reasoning on this aspect of the matter.

Mr. R. Ryan

Plant and machinery in the past has been invariably treated separately. It is the wear and tear of plant and machinery which is taken into account, not depreciation in the value of the commodity, except where it arises through wear and tear. Of course, it can be argued that the capital allowance is, to some extent, compensation for wear and tear of buildings but they are not quite the same. They are treated differently. The wear and tear allowance is applicable to machinery and not to buildings.

Mr. Blaney

But surely the Minister must agree that the depreciation and, indeed, the wear and tear of farm buildings, can only be differentiated from that of plant and machinery and/or equipment by virtue of the fact that you cannot normally "up" and take the farm building with you whereas you might do so in so far as plant, machinery and equipment is concerned. Perhaps, this is really the reason why the differentiation would appear to be made at this particular time rather than what appears to me to be a rather naïve approach of the Minister that what is not done and has not been done in other somewhat similar situations should not now be done. If it appears to the Minister that a change might be made and, therefore, it could be regarded as better done than we have been doing in the past in regard to these write-off allowances, why not do the job better by making the appropriate amendment? Since the Minister is breaking new ground in bringing into the tax code profits from farming which heretofore were exempt, surely, in those circumstances he will consider the idea somewhat along the lines of either of the two amendments or perhaps one suitably worded by his own advisers.

Mr. R. Ryan

I have been saying all along that I cannot see that there is any case for establishing new laws and new principles here. Under existing law wear and tear allowances are available for all business activities. They will now become available to people engaged in farming. Capital allowances have never been available except from a current date. We are applying the same principles to farming activities. To depart from these principles——

Mr. Haughey

That is because we have an on-going taxation system but here we have a new taxation system.

Mr. R. Ryan

I mentioned other specific capital allowances which were new, which were introduced at certain times and were novel at the time of introduction but there was never any question of backdating them even though there was capital expenditure of a similar nature incurred in the years immediately preceding the granting of these allowances. I think it is very important that we do not now proceed to grant new exemptions. Any Minister for Finance knows—and there are at least two previous Ministers for Finance in this House—that if we open the way to any change in the existing principles the floodgates would be opened, which could have very, very serious ramifications indeed. That is one aspect of it. The other one is that no special case has been made and no particular difficulties have been identified which would justify a departure from these very well-established principles. Wear and tear allowances will be available for plant and machinery; the other allowances will be applicable from the date of the commencement of the liability to the tax charge.

Mr. Blaney

Again, might I suggest to the Minister that since the provision of farm buildings, particularly in recent times, but back over a number of years, has been encouraged by State subvention surely the making of due allowance for existing buildings and their replacement—as suggested in these amendments—could be regarded as an encouragement to farmers to improve the existing facilities or to erect new buildings? Otherwise the Minister for Agriculture and Fisheries will, no doubt, be seeking moneys from the Minister for Finance and the Exchequer to pay out to them in order to encourage them to do this. This is a consideration that may not have parallels in other regards as the Minister has mentioned and would to some degree set it apart and, therefore, it could make some impact on the Minister's thinking in regard to treating this matter, even if differently from other matters that he has in mind, before he would finally commit himself to this in its present form.

Amendment put and declared lost.

Amendment No. 18 not moved.

Question proposed: "That section 22 stand part of the Bill."

Mr. Colley

On the section there are two points I want to put to the Minister. First, I wonder if he could explain to us the significance of the reference in subsection (1) to "the provisions of section 15 (1)". Having regard to sections 20 and 21, in the first subsection in each case the reference is to section 15 without any reference to the subsection. I would like the Minister to explain what is involved by the reference to section 15 (1). The other point I want to put to the Minister is whether he has considered including in the items which would qualify for a capital expenditure allowance drainage work on wet farmlands. On the face of it, it would appear to be the kind of thing that should qualify in the same way as the other items mentioned in subsection (2). I wonder if the Minister has considered that.

Mr. R. Ryan

If I may take the Deputy's second question first, "other works" would include the drainage.

Mr. Colley

We can be reasonably sure of that, can we? Is that the advice available to the Minister?

(Interruptions.)

Mr. R. Ryan

I will check this. I am sure we can put in drainage on the Report Stage if necessary.

Subsection (1) specifies that the section is to apply to any person carrying on farming the profits again from which are chargeable to tax under section 15. The term "any person", of course, includes any individual farmer, or company or body carrying on farming. It would relate to people who furnish actual accounts.

Mr. Colley

Only?

Mr. R. Ryan

Yes.

Mr. Colley

That is really what I wanted to establish.

Mr. Blaney

Could I ask the Minister a question? In the treatment of farm profits in conjunction with other business activities or company profits, will the losses incurred on the farm side of these mixed enterprises be allowed to be written off against profits on the profitable side?

Mr. R. Ryan

Losses on what side?

Mr. Blaney

On the farming side.

Mr. R. Ryan

This is the point I mentioned earlier. I am glad to see that the Deputy has slept on it and he now sees the wisdom and the validity of what I said. I said that if losses are made this year they may be set-off against profits in other years.

Mr. Blaney

I am afraid the Minister is being a little facetious.

Mr. R. Ryan

I am far from facetious. I am glad that enlightenment is dawning on the Deputy.

Mr. Blaney

As I said earlier, the elasticity seems to have gone. As I recall it, the Minister said that the losses that would be incurred this year could be written off in other years. It is not quite the same thing as what I am asking, which is the reverse of what would be held out as justification for this measure by some members of the parties supporting the Government, and that would be to restrict as far as is possible the utilisation of farmlands and farming enterprises by business interests for the burying of their profits in the farm. What I am now asking is whether, in fact, the reverse can take place legitimately; in other words, can the losses on the farm be written off against the profits of the business instead of the business profits being buried in the farm which was exempted?

Mr. R. Ryan

That would be verboten. We do not propose that losses can be set off against profits in other lines of business.

Mr. Blaney

Yet is it not so that the profits of the farming may be added to the profits chargeable on other businesses of the same party or interests and if one is regular and legitimate, surely the reverse must also be so?

Mr. R. Ryan

There are different kinds of farm profits. There are those which are chargeable and those which are not. If profits are being made from a farming activity which are not liable to income tax and if that activity in a particular year suffers losses then those losses will not be available to write off against profits from some other activity.

Mr. Blaney

I am sorry but the Minister still has not got the point. I will try to put it another way. In the case of a business activity or a chargeable income earned by a person who also comes within the new tax code on farm profits, will losses on the farming side be capable of being written off against the taxable income on the other side?

Mr. R. Ryan

If the farm activity is activity which itself is liable to income tax, but if it is in an exempted classification, then it will not be available.

Question put and agreed to.

SECTION 23.

Mr. Colley

I move amendment No. 19:

In page 13, between lines 36 and 37, to insert a new section as follows:—

"(1) This section applies to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 other than a person who elects as provided for in section 21 (1).

(2) Where a person to whom this section applies incurs, for the purpose of farming farmland occupied by him, capital expenditure on the provision of farmhouses, farm buildings, machinery or plant, there shall be made to him for the year of assessment in the basis period for which the expenditure is incurred, an allowance equal to one-half of the expenditure, and such allowance shall be made as a deduction in charging the profits or gains from farming the said farm land.".

The object of this amendment is to provide an investment allowance for farmers paying tax on an accounts basis only—I should like to make that clear—and it would not apply in the case of those who are assessed on the notional basis. An investment allowance in the case of those who are paying on an accounts basis would be an allowance of 50 per cent.

The reason behind this amendment is primarily that where farmers are paying income tax on the same basis as another business or industry on an accounts basis, we say that as far as possible the same allowances, et cetera, should apply. However, as has been mentioned previously in other connections, there is available to industry which engages in the export market, export tax relief. It does not appear to be possible to apply export tax relief to the individual farmer but an allowance of this kind, applied on this basis, would be an effort to provide a somewhat analogous recompense to farmers, analogous to the export tax relief which is provided for industry. Having regard to the fact that such a high percentage of farming output is exported, it seems reasonable that an effort should be made to provide some kind of allowance to farmers to correspond in some way with the export tax relief. This is the thinking behind this amendment and it would apply only in the case of those farmers who are being assessed for tax on an accounts basis.

Mr. R. Ryan

I find it hard to recognise Deputy George Colley as the man who was my predecessor in the office of Minister for Finance. I seem to recall several occasions when he explained what a difference there was between profits generated by manufacturing industry for exports and profits from agricultural activities. The reason why——

Mr. Colley

Which were not subject to income tax.

Mr. R. Ryan

——manufacturing industry was exempted in respect of goods manufactured for export was in order to stimulate the industrial arm. It was revolutionary when it was introduced and indeed, it was objected to by the Fianna Fáil Party. It was introduced to transform the negative attitude that existed before then, which was one which forbade Irish industry to operate unless it had a 51 per cent Irish ownership.

I was in Turkey—now very much in the news—about two years ago and it was very interesting to hear Turkish economists argue very strongly and convincingly and, I am glad to say, successfully, against concessions. Turkey had a law which was quite similar to the Control of Manufacturers Act which we had here. It operated in the same way and very much against the interests of Turkey. They are now changing it, with remarkable improvements as a consequence in the Turkish economy.

I do not think it is in any way belittling to Irish agriculture to say that it does not require that incentive, because it is something that is here; its roots are down, the attachment to the farm, the love of the land, is something that does not require fiscal encouragement to generate. Any realist knows it did not need and does not now need this very specific and artificial, but temporary injection, which had to be given in order to stimulate interest in the industrial activity which was so necessary in order to get us away from subsistence living which we had until we gave industry this injection. This injection I would remind the House was given in the days of the Coalition Government.

The amendment now suggested by Deputy Colley and Deputy Collins provides that where farmers elect to be charged tax on the basis of actual profits, they may be entitled to a remission allowance of 50 per cent of capital expenditure incurred on the provision of farmhouses, farm buildings, machinery or plant. If the amendment were accepted it would mean that in relation to farmhouses and farm buildings—on which we have already provided a 10 per cent allowance per year under section 22—the total expenditure on such buildings could be written off in a mere five years, 50 per cent remission allowance of 10 per cent in the first year, plus 10 per cent in each of the following four years.

If the other amendment from the same Deputies to increase the annual allowance from 10 to 20 per cent were also accepted it would mean the total write-off of such expenditures in a period of a mere three years——

Mr. Colley

The Minister has already mentioned that, so do not count in that figure.

Mr. R. Ryan

I am not counting it in. I am just pointing out how liberal the Opposition can be in throwing away allowances and concessions. A writing off of expenditure on buildings over a span as short as five years would be quite unrealistic. It certainly contrasts very sharply with the treatment for industrial buildings which has been referred to here. Industrial buildings can be written off over 39 years or 49 years. That is quite different from what is being proposed in these allowances.

(Interruptions.)

Mr. R. Ryan

In the case of hotel buildings and market garden buildings expenditure on those buildings can be written off over a period of nine years. There is an initial allowance of 10 per cent, a first year allowance of 10 per cent, and then 10 per cent for each eight years thereafter. When the initial allowance of 10 per cent was brought in for industrial buildings in 1956 during the time of the last Coalition Government, it also applied to hotels. In 1959 an annual allowance of 2 per cent was made in the case of industrial buildings but it was decided that in the case of hotels the annual allowance should be 10 per cent. There was a very good reason for that. It was because, in order to keep our hotels up to modern, acceptable standards, to ensure that they are redecorated frequently enough and to maintain the proper standards, we had to ensure a very frequent reinvestment of money in them. If we do not do that the danger is that the whole stock of hotels and our standards could slip back to the kind of thing we experienced up to about 20 years ago.

I hope I have shown that by comparison with any other industry or activity in this country, the amendment proposed is quite exorbitant and would be out of pattern with any concessions available to any other sector of the economy. In the circumstances of the agricultural industry, it would not be at all warranted.

I would love to grant all these concessions that have been sought since early yesterday morning, but we cannot give any of them without having a look at the ramifications which the granting of these concessions would have. If similar concessions were to be sought by all other sectors of the economy the whole tax position would become so topsy-turvy as to be meaningless.

Mr. Blaney

Could I bring the Minister back to the reality of the situation? The Minister talks about niggardliness on the part of his predecessors and the granting of concessions. Surely he is forgetting entirely that he is far from granting concessions but is in fact imposing penalties for the first time. This amendment seeks to make the penalties less severe than they are according to the proposals before us.

In a Committee Stage debate as protracted as this, I suppose it is excusable and understandable that the Minister should get himself into the frame of mind of being less severe in the application of this the tax code for the first time on the farming community. When amendments come from the Opposition perhaps he would think in terms of making a present of something to them rather than lessening the penalty that he is imposing on them for the first time.

Replying to Deputy Colley, the Minister spoke about the reason for the difference of treatment for hotels as against the allowances for other buildings and industry. But it is surely fully accepted down the years, and deplored, that we do not move fast enough in modernising our farming activities. Various schemes have been devised—and no doubt will continue to be devised at considerable cost to the Exchequer—to encourage farmers to make improvements and incur the capital expenditure necessary to update some of their methods. This applies very particularly to farm buildings.

I would remind the Minister, as he has been reminded time and again, that the proportion of exports which derives from the farming community is a most significant part of our overall general exports. We are not giving any recognition in any way to this while although we do so in so far as manufacturing industry and industrial products are concerned. I have instanced to the Minister—and I have a particular example in mind—where the benefit of the concession on tax-free export profits of new industry has resulted in recent years of payment of a dividend—without tax being deducted, of course—which in each of two years has amounted to more than the total initial capital input for both plant and machinery.

I am not cavilling at that. I say to those people: "Well done"; but while that can be done in regard to manufacturing industry, surely in the case of our most important major industry which contributes so much directly—and an increasing amount indirectly—to our exports, some small consideration might be given to redressing the balance.

This applies not only in regard to this particular amendment but to many of the following amendments. It would be better if the Minister could in some way relieve the imposition of taxation on farming profits for the future rather than straining his big-heartedness to make a concession to them. We want to ease the impact of the penalty rather than seek a concession or hand-out for these hard-pressed people.

Amendment, by leave, withdrawn.

Section put and agreed to.

Section 24 agreed to.

SECTION 25.

Amendment No. 20 not moved.

Question proposed: "That section 25 stand part of the Bill."

Mr. Blaney

Perhaps I could ask the Minister to enlighten the House as to what section 25 really implies.

Mr. R. Ryan

The purpose of section 25 is to secure that where an allowance for wear and tear or a balancing allowance or balancing charge arises in relation to plant or machinery in charging farming profits for the year 1974-75 or any subsequent year the amount would be computed in the case of machinery or plant which was acquired prior to the commencement of the year of assessment as if the appropriate wear and tear allowance for the years when the farming profits were exempt had been duly claimed and allowed. Perhaps I might anticipate that the Deputy would make the point: "Why do we not do the same in relation to capital expenditure on buildings?" All I can say is that it has never been so applied in the past and I am simply applying the law and the practices as they have previously been applied.

Mr. Blaney

Surely the Minister is making a virtue of being a non-innovator in so far as applying anything new is concerned, in so far as reliefs are concerned, while at the same time claiming great moral courage and holding himself up as a great innovator in so far as taxing the farming community is concerned. All I can say at this hour of the morning is that you cannot have it both ways.

Mr. R. Ryan

Having been an innovator in so many things I have sufficient humility not to try too much at the one time.

Mr. Blaney

That is fantastic.

Question put and agreed to.

NEW SECTION.

Mr. Colley

I move amendment No. 21:

In page 14, between lines 30 and 31, to insert a new section as follows:—

"(1) This section applies to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 other than a person who elects as provided for in section 21 (1).

(2) In any year of assessment in charging profits or gains of any person to whom this section applies no deduction shall be allowed in respect of rates payable for that year of assessment in respect of farm land occupied by that person for the said year of assessment but, instead, there shall be deducted from the tax which would, otherwise, be chargeable the full amount of such rates."

The objective aimed at in this amendment is to ensure that in the case of farmers paying income tax on an accounts basis, they would, having had their tax assessed, be entitled to deduct from the amount of tax payable, the amount of rates they paid or for which they are liable. Effectively this would amount to derating for farmers who were paying income tax on an accounts basis. A number of the relevant points and arguments were made earlier in the debate under other headings and I do not propose to go into them all in detail again. However I want to point out that it is not correct for the Minister to argue, as he did in this connection earlier, that the correct comparison in this matter is between one taxpayer and another. It is quite unrealistic for the Minister to ignore the situation obtaining for competitors of farmers in this country particularly competitors in the North and in Britain. Furthermore, as Deputy Crinion pointed out earlier, there are figures available which would suggest in relation to the figures available for 1972, which I think are the latest available under this heading, that the proportion of farm income of the farmers who would be liable to income tax is double the proportion which they pay in rates and, therefore, double that paid by other businesses.

For these and many other reasons, which I am not going to advance at this time, I believe that it is important and just that, in the case of farmers who are being taxed on an accounts basis, they should be allowed to deduct the rates from the actual amount which would otherwise be due. Failure to do this amounts to double taxation on the one asset, because it is undoubtedly true to say that the land for farmers is, as far as we can have any analogy, analogous to the raw material for industry, which is not subject to rates. Furthermore, the services provided to farmers in return for rates are not in any way comparable to the services provided in general to industry and commerce in return for rates. For these reasons I would strongly urge this amendment on the Minister.

Mr. R. Ryan

I referred to this matter earlier. It is very important to have the facts right because we have listened to a great deal of unfounded, emotional talk on the matter of the rates burden on the farming community. Taking the calculations which have been used since the Commission on Income Taxation, 1960, we find that by 1973 rates as a percentage of farm income was 3.8 per cent. Rates as a percentage of non-agricultural income was 5 per cent.

Mr. Colley

I did state that is not the comparison.

Mr. R. Ryan

Fan nóiméad. If we leave these generalised figures aside for one moment and look at the position of farmers who are paying rates gainst those who are not—77 per cent of farm holdings are not liable for rates at all—and if we take the income of farmers who are liable for rates we find that their income works out at about £261 million. Their rates liability on that represents 5 per cent.

Mr. Colley

Could the Minister give the figure for the farmers who would be liable for income tax? That is the really relevant comparison, is it not?

Mr. R. Ryan

I am dealing with the farmer liable for rates. The figure of 5 per cent corresponds with the general figure for non-agricultural income. We have not the relevant rates liability of the non-agricultural income sector who would be in the top sector. Reliable calculations show that they are paying between 6 per cent and 7 per cent. Without going into too much detail— the statistics are not there in sufficient detail to be precise—certainly the picture which emerges is that the rates burden on the agricultural community is no greater than that on the industrial and commercial sector and there are certain statistics available which show that it is very significantly less.

I am sorry that I cannot accept the amendment. In considering the question of the grant to farmers of a special extra credit for rates, and that is what the proposal suggests, reference must be made to the relief by the Exchequer to try to provide relief for rates on lands by means of the agricultural grant. This amounts to £27 million out of £43 million to which agricultural land is at present liable. Farms with a valuation of under £100 as well as those over £100 are entitled to this relief. Some of those—I mentioned about 7,000 out of 20,000—will be liable for income tax as a result of this Bill. For the relief of farmers with land valuations of, for example, £100, £150 or £200, it amounts to 40 per cent, 37 per cent and 35 per cent respectively.

That is a very considerable contribution which farmers receive from other taxpayers in the community. Farmers with a rateable valuation of £100 get 40 per cent relief; farmers with £150 valuation get 37 per cent relief; farmers with a valuation of £200 get 35 per cent relief. In addition to that they get £17 for every male full-time worker.

Therefore, if account is taken of the admissibility under this Bill of rates as a deduction against income the aggregate relief provided to a farmer with a rateable valuation of £100 is 56 per cent; a £150 rateable valuation farmer gets 53 per cent relief and a £200 farmer gets 52 per cent relief. These are very significant contributions from other taxpayers and certainly operate very significantly to the benefit of the agricultural community. I would hope that in any future discussions on these matters these facts would be put in the balance rather than emotive talk about a tax upon a tax. Everybody liable for rates—and the Fianna Fáil White Paper on rates says there is no alternative to rates—find invariably they have to pay other taxes as well. We all pay several taxes. We pay direct taxes; we pay indirect taxes; we pay taxes for services; we pay taxes on the transfer of property; we pay local rates. We pay a multitude of different rates. The way to do away with all these taxes is of course to apply a flat VAT rate across the board to do away with any other form of tax. But that would be anti-social because it would oblige people with little or no means to pay the tax burdens which the better-off sections of the community should carry. I do not think that would be fair.

I do not want to prolong the debate at this hour of the morning. If Members desired it, I could give a half-hour dissertation on this, which I think would completely deflate the argument that farmers are being unfairly treated. The truth is that the situation in 1974 is not at all the same as it was in 1960. In 1960 they paid more than twice the amount of rates percentagewise as was paid by other sectors of the community. Today they have overtaken other sections of the community and the burden of rates they carry is significantly higher.

Mr. J. Gibbons

The gap is widening.

Mr. R. Ryan

The gap is widening in favour of farmers.

Mr. J. Gibbons

No.

Mr. R. Ryan

In 1960 farmers were paying anything from 10 per cent to 13 per cent of their profits in rates. Today it is down to 3.8 per cent.

Mr. J. Gibbons

There are no profits.

Mr. R. Ryan

Farmers make money out of items other than beef. Perhaps Deputy Gibbons does not know this.

Mr. J. Gibbons

Or milk, the other big wing of the cattle industry. The profitability of this depends to a large degree on the price of the cattle.

(Interruptions.)

Mr. R. Ryan

I believe if we were to do a count that my family association with the dairy industry is a damn sight closer and deeper than many of those who purport to lecture me. I know all about it.

Mr. Blaney

May I just refer to the Minister's reply and, in doing so, support the amendment as proposed. The Minister says there has been too much emotive talk about these provisions but he himself then goes on to display this same sort of quality that he condemns in others.

Leaving that aside, I think the Minister is making an error in so far as the 77 per cent of farmers who do not pay any rates on land are concerned when he makes his case about how well the farmers are treated by way of relief of rates paid out from the Exchequer. He repeatedly falls into a mistake in regard to the remaining 23 per cent. On his own figures they would be deemed to be paying rates on agricultural land. But the Minister takes all of that 23 per cent and uses it in his calculations to show how the amount of rates in relation to the income of that group is lower by some 1½ per cent than it is in respect of industrial and manufacturing concerns.

This is certainly very misleading. I believe that, instead of the figure the Minister has given to us here just now, the percentage works out at something comparable to the 5 per cent that he indicates it is in the other walks of life. If he could make a calculation, which I doubt is capable of being made at this stage, he might well find that the people in the farming community who are being brought into this tax net are far fewer than the 23 per cent paying some rates on agricultural land. Therefore the Minister's 5 per cent may well have to be increased, perhaps by another 5 per cent or 10 per cent in order to be put in its proper perspective. Perhaps the Minister or some of his advisers in the time that is left to them might correct this. Whereas my suggestion that the percentage could be as high as 15 might be wrong, I have no doubt at all that the figure of 5 per cent quoted by the Minister is wrong.

I think the Minister is totally and absolutely unfair to the farming community when he talks about the £27 million for relief of rates being paid out of the Exchequer, saying that this indicates the kind manner in which the present Government are treating the farming community. Might I say to the Minister that he is forgetting to quite a considerable degree—I do not suggest that he is deliberately forgetting; he is genuinely forgetting— the fact that the annual amount which must be paid from the Exchequer in lieu of rates that should have been collected is the basis on which the strongest possible case can be made against this new tax code being applied to the farming community. That money is not paid from the Exchequer on the basis that we like the colour of their hair or their eyes, or because we want to cling on to the land as something that should be preserved as a national monument. It is done because Deputies from all over the country have made representations as to the financial pressures put on farmers by the escalating poundage being charged on valuations and also because of our knowledge through various Deputies of the inequities of the existing valuation system. It is because of the need for relief of the burdens that farmers have experienced in an ever-increasing way over the years that the Minister finds himself in the position that £27 million is required to fill the gap between what would be paid by the farming community as a whole and what is being paid.

Surely the Minister cannot be serious when he suggests that this is a reason why favourable consideration should not be given to even the most modest suggestion by way of amendment of the new penalties that he is imposing by taxing farming profits for the first time. It is in the other direction that the Minister should be looking. He should take note of the pressures that have been borne in on this and previous Governments not only to continue the rates reliefs and remissions that have been in operation but to increase them, irrespective of the demands that there might be for money or the difficulty of raising money. For a considerable number of years past the total amount in rates relief has risen and indeed in other circumstances—I suppose understandably so, particularly at election times—it was most difficult for the Minister's own party to know what they were doing by way of rates relief and what they were going to do in that respect.

If that is the case then surely it can be said that these reliefs are given because they are absolutely necessary and the need for them has been established. In those circumstances the Minister is totally wrong in quoting this £27 million rates relief for the farming community as a justification for knocking every suggestion made to ease the new penalties involved in the tax code that he now proposes to apply. I would ask him to refrain from reiteration of the £27 million as if it were a prize that he had handed out free, gratis and for nothing and for no reason good, bad or indifferent other than "we like the farmers". It is paid because we regard it as being required to be paid by virtue of the circumstances in which the farming community are trying to survive and in order to provide the basis for a thriving agriculture on which our very existence depends as it has done over the years. The Minister is far from being fair in suggesting that in giving £27 million the Government are not doing badly and the farmers are not doing badly and while some of them may be losing there are others making money at the moment. This is not a fair approach and certainly is not in keeping with what the Minister's attitude should be.

In a situation where he is for the first time creating a situation that farming profits will bear tax as from now, I would ask the Minister to relax this attitude that unnecessary large sums of money are being given to the farming community by way of rates relief and that therefore the new tax code is justified. That is a wrong attitude and one which can well be misunderstood and can do no good at a time when farmers are very, very hard pressed, particularly in the cattle production side. Nobody can gainsay that they are losing. There is no point in saying otherwise. As has been interjected here by Deputy Gibbons the price of a calf or the lack of a price for a calf has a very direct bearing on the wellbeing and profitability of the dairying industry. Certainly in that regard the dairying industry has suffered a blow over the last 12 months. Even though it may have been a less severe blow than was given to those who were induced by various devices of Government policy over these recent years to leave dairying and to go totally into beef production, nevertheless it is still true to say that the losses being sustained by beef producers are reflected to quite a considerable degree in the disasters that have occurred in the dairying industry in regard to the price of calves.

So let us stop talking as if the farmers were really cleaning up. Let us remember how far short of our promises has been the performance in regard to the bonanza and the markets that were to be available when we joined the EEC. The farmers were misled, not deliberately, but misled they were. They are paying the penalty at the moment and now insult is added to injury by the great fellows in the Coalition treating the farmers in the same way as they treat everybody else. If we want to treat the farmers in the same way as everybody else then we should have regard to the importance of their industry without which there would be very little else capable of thriving in this country. This is something which we should not forget. We should keep in mind that we may well drive out of agriculture farmers who have held on through good and bad times and who have stayed with their land because they wished to do so, and not merely for profit. I would hate to see the time when only those who regarded the land merely as a means by which they could literally or metaphorically milk profits would own land. When that time comes the Minister and others may regret that they may have hastened that day by the measures proposed in this Bill.

I would ask the Minister again, even in the small respects that the various amendments indicate, to recognise the special place that agriculture and the farming community have in the life of the nation and to appreciate that he is most unfortunate in his choice of year in which to apply a tax code to the farming community who at this stage need very special consideration and a morale boost rather than the kick in the pants which is being administered to them by this Bill.

Mr. J. Gibbons

When the Minister, with his appalling lack of understanding of the rural scene, was speaking earlier on this section, he said that while things were admittedly in a bad way in the beef sector of the farming industry, there were other things. What did he mean? Certainly not the livestock area. Did he mean the dairy sector?

In the files of his colleague the Minister for Agriculture and Fisheries there are carefully prepared accounts from one of the best dairy farmers in Ireland, who is a constituent of mine. He keeps nearly 200 dairy cows with average yields of over 800 gallons each. The standard of management could not be bettered not only in this country but probably within the European Community. His stocking rate is one cow to the statute acre. This is on fairly good average Kilkenny land. His net profit last year was £38 per acre and, incidentally, per cow because of the stocking rate —one cow per acre. This year so far he is sustaining a loss of £18-£19 per acre and the key factor in this dramatic change that is putting this highly efficient farmer into a state of disarray is the disastrous drop in the price of calves. Last year each cow and each acre would have made an average price of £60, £70, even £80. The last time I was talking to this man he told me that of the calves of his 200 cows there remain on his hands 100 calves, costing £1 a week each to support because they are unsaleable. The Minister ought not to imply even after his long and fatiguing day, that while things in the beef sector may be extremely chaotic, that things in other areas of the livestock sector are good. They are not.

Let me look back briefly at what happened at last year's cereal harvest. We discover that barley producers sold the profits of their labour at about £42-£43 a ton. At one period early this year that barley, which was put into store at 14, 15 or 16 per cent moisture and required very little, if any, drying, was sold back to the farmers and cattle sellers at harvest time because there was no farm storage for it, at prices up to £70 a ton. The Minister for Industry and Commerce told us here a couple of months ago that there was nothing he could do about it and there was nothing that he wanted to do about it. The farmers who sold that barley sold it at a price that was considerably better than that of the year before, but the people who derived a real profit from it were not the farmers at all, but the middlemen, the merchants, the exploiters who sold back to the farmers, in many cases the same farmers, the produce of their own labour, having exacted £20-£25 a ton profit, for merely storing it in stores that were built by liberal Government grants. The Minister for Agriculture and Fisheries and the Department have not yet seen the light and seen the urgent necessity of the provision of farm storage so that this does not again happen.

I should like to refer to another remark that was made on this section. It was an implication that the decision to enter the EEC was in some way erroneous and that people were becoming disillusioned with it. This notion is being carefully inculcated by members of the Government who opposed our entry into the EEC, in an effort to excuse themselves for the appalling mismanagement of this country's agriculture since 14th March last year. It is a very distressing thing to see. The Community beef marketers, in my opinion, badly mismanaged. I said as much to the Commissioner in the European Parliament a short time ago. When, too late, measures have been taken to alleviate the situation, I would expect that the pay-off of the measures that have been taken will not take effect in Ireland for six months.

It is wrong, mischievous and destructive of Irish interests to suggest that our participation in the European Community was a mistake. It is worth recalling that in 1970 we were informed by the British authorities that the amount of butter they would purchase from the Irish dairy industry in that year was 25,000 tons. Thereafter we sold the best Kerrygold butter in places such as Mexico and Nigeria for as little as six old pence per pound. We need not do that any more.

An Ceann Comhairle

I hesitate to interrupt but this is in the nature of a Second Reading Speech.

Mr. J. Gibbons

I am very anxious to point out to the Minister that he is grossly in error if he thinks that farming profitability and farming standards in 1974 are any better than they were in any year of the preceding 30 or 40 years. I regret to say that they are worse.

Amendment put.

The Committee divided: Tá, 51; Níl, 55.

Tá

• Allen, Lorcan.
• Andrews, David.
• Blaney, Neil T.
• Brady, Philip A.
• Brennan, Joseph.
• Briscoe, Ben.
• Browne, Seán.
• Brugha, Ruairí.
• Burke, Raphael P.
• Callanan, John.
• Calleary, Seán.
• Carter, Frank.
• Colley, George.
• Crinion, Brendan.
• Cronin, Jerry.
• Crowley, Flor.
• Cunningham, Liam.
• Daly, Brendan.
• de Valera, Vivion.
• Farrell, Joseph.
• Faulkner, Pádraig.
• Fitzpatrick, Tom (Dublin Central).
• Flanagan, Seán.
• French, Seán.
• Gallagher, Denis.
• Gibbons, Hugh.
• Gibbons, James.
• Gogan, Richard P.
• Haughey, Charles.
• Healy, Augustine A.
• Herbert, Michael.
• Hussey, Thomas.
• Kenneally, William.
• Kitt, Michael F.
• Lemass, Noel T.
• Leonard, James.
• Loughnane, William.
• McEllistrim, Thomas.
• MacSharry, Ray.
• Meaney, Tom.
• Molloy, Robert.
• Moore, Seán.
• Nolan, Thomas.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Malley, Desmond.
• Sheridan, Joseph.
• Timmons, Eugene.
• Tunney, Jim.
• Walsh, Seán.
• Wilson, John P.

Níl

• Barry, Peter.
• Barry, Richard.
• Begley, Michael.
• Belton, Luke.
• Belton, Paddy.
• Bermingham, Joseph.
• Bruton, John.
• Burke, Dick.
• Burke, Joan T.
• Burke, Liam.
• Collins, Edward.
• Conlan, John F.
• Coogan, Fintan.
• Cooney, Patrick M.
• Flanagan, Oliver J.
• Gilhawley, Eugene.
• Governey, Desmond.
• Griffin, Brendan.
• Kavanagh, Liam.
• Kelly, John.
• Kenny, Henry.
• Kyne, Thomas A.
• L'Estrange, Gerald.
• Lynch, Gerard.
• McDonald, Charles B.
• McLaughlin, Joseph.
• Malone, Patrick.
• Murphy, Michael P.
• Cosgrave, Liam.
• Coughlan, Stephen.
• Creed, Donal.
• Crotty, Kieran.
• Cruise-O'Brien, Conor.
• Desmond, Barry.
• Desmond, Eileen.
• Dockrell, Henry P.
• Dockrell, Maurice.
• Donegan, Patrick S.
• Dunne, Thomas.
• Esmonde, John G.
• Finn, Martin.
• Fitzpatrick, Tom (Cavan).
• O'Brien, Fergus.
• O'Donnell, Tom.
• O'Leary, Michael.
• O'Sullivan, John L.
• Pattison, Seamus.
• Ryan, John J.
• Ryan, Richie.
• Spring, Dan.
• Staunton, Myles.
• Timmins, Godfrey.
• Toal, Brendan.
• Tully, James.
• White, James.

Tellers: Tá, Deputies Browne and Healy; Níl, Deputies Kelly and B. Desmond.

Amendment declared lost.

SECTION 26.

Question proposed: "That section 26 stand part of the Bill."

Mr. Haughey

I have a motion down to oppose section 26. I might as well explain my purpose in putting down an amendment to sections 26 and 27 is simply to have farming regarded the same as any other trade or business, namely, that losses would be fully allowable both for income tax and CPT purposes, where there is a company involved. As in so many other provisions in this chapter, less generous provisions are made in regard to the carrying forward of losses on farming than is the general rule in trade and the professions generally. My reason for putting down these amendments—that is, opposing sections 26, 27 and/or deleting subsection (7) of section 27—was to endeavour to have the normal provision for losses obtain in regard to farming losses. In view of the time at our disposal and in order not to delay the House, as there are other perhaps much more important amendments later on, I withdraw these three amendments.

Question put and agreed to.

SECTION 27.

An Ceann Comhairle

I should have suggested to Deputy Haughey that amendment No. 22 in his name and amendment No. 23 in the name of the Minister, which seem to be related, might be taken together.

Mr. Haughey

That is all right. I will then withdraw my proposal to oppose sections 26 and 27 and leave amendment No. 22 to be taken with that of the Minister.

An Ceann Comhairle

May I take it then that amendment No. 22 is being withdrawn?

Mr. Haughey

I do not mind. I had proposed to withdraw it, but then I understood it was suggested that we should take it with amendment No. 23 in the name of the Minister. However, I am prepared to withdraw amendment No. 22 in my name, and I am doing that so that the House may get on with some more important amendments later on. The purpose of my putting down amendment No. 22 was to enable losses in farming to be carried forward for CPT purposes, as they are in the case of any other trade or profession. As the Bill stands they are not so entitled to be carried forward.

Amendment No. 22 not moved.

Mr. R. Ryan

I move amendment No. 23:

In subsection (7), page 16, line 30, to delete "for the purposes of section 25 of the Finance Act, 1964" and to substitute "in computing profits or losses for the purposes of section 53 of the Finance Act, 1920".

Mr. Haughey

Purely tidying up.

Amendment agreed to.

Section 27, as amended, agreed to.

SECTION 28.

Mr. Colley

I move amendment No. 24:

In page 16, between lines 30 and 31, to insert a new section as follows:—

"(1) This section applies to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with the provisions of section 15 other than a person who elects as provided for in section 21 (1).

(2) Where a person to whom this section applies would, for any year of assessment, be charged to tax in accordance with the provisions of section 58 (1) of the Income Tax Act, 1967, under Case 1 of Schedule D on the full amount of the profits or gains of the year preceding the year of assessment, he may, by notice in writing in accordance with the provisions of subsection (3), elect to be charged to tax for that year of assessment and for each of the immediately succeeding four years of assessment on the yearly average of the full amount of the profits or gains of the year of assessment immediately preceding the year in which such notice is given and of the full amount of the profits or gains of the immediately succeeding four years of assessment.

(3) Notice of election under subsection (2) shall be given, by the person exercising such right of election, in writing to the Inspector within six months after the commencement of the year of assessment in which it is given and shall be irrevocable."

The purpose of this amendment is to provide that, in the case of farmers who are paying income tax on an account basis as distinct from the notional basis of assessment, they would be given an option, which option would be irrevocable, to have their profits and accounts averaged over a period of five years and their income tax liability eventually based on the average profit situation over that five years. There are a number of reasons for this, but the primary reason is that because of the inherent nature of agriculture, it is affected by weather and climatic conditions in a way no other business is and by the inevitable cyclical nature of the agricultural industry. I understand that there is a provision having the same effect in operation in New Zealand where, as the House knows, agriculture is a very important part of the national economy. I would hope that the Minister would find it possible, having regard to the inherent nature of agriculture, to accept this amendment.

Progress reported: Committee to sit again.